I am located in Canada. I was wondering if instead of contributing directly into an RRSP, why people don't instead open up an RESP for themselves, contribute as much as they can afford (up to 50k) and then after 9 years, they would be eligible to withdraw gains as Accumulated Income Payments (AIPs) and transfer those directly to their RRSP to gain all of the tax benefits of directly contributing to their RRSP. In essence, allowing them to invest up to 50k tax-free.

So my questions are as follows:

  1. Why is this not a common practice? The only downsides I see to this plan are the fact that you must liquidate your RESP 35 years after inception.

  2. Is this basically a 50k dollar TFSA alternative?

  • tewealth.com/… seems to agree, but note you must have RRSP room. If you had money to put into the RESP and RRSP room, why not just put the money in the RRSP in the first place? – Kate Gregory Jun 25 '20 at 21:17

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