Registered Education Savings Plans (RESP)
Invest in Their Future.
Tax-sheltered growth and government grants to maximize every dollar you save.
What is an RESP?
A Registered Education Savings Plan (RESP) is a special savings/investment account in Canada designed to help families save for a child’s post-secondary education (college, university, trade school, apprenticeship, etc.).
It offers tax-advantaged growth and government grants, so every dollar you put in gets a boost.
- Anyone can open one — parents, grandparents, guardians, or even friends.
- Contributions are not tax deductible (i.e. you don’t get a deduction for putting money in).
- What does get tax-advantaged is how the money grows: investment earnings and grants grow tax-sheltered until withdrawn.
Government Grants & Incentives
One of the biggest advantages of RESP is access to government grants, which give you “free money” to boost your savings.
| Grant / Incentive | What It Is | How Much / Who Qualifies |
|---|---|---|
| Canada Education Savings Grant (CESG) | Basic grant paid by the federal government, matching a percentage of what you contribute, to help with education costs. |
20% on the first $2,500 you contribute each year = $500/year basic, up to a lifetime maximum of $7,200 per child. Additional top-ups (“Additional CESG”) are possible for low- or middle-income families. |
| Canada Learning Bond (CLB) | Grant for families with lower income, even if they can’t contribute. Helps make RESP accessible. | Up to $2,000 over time per eligible child. Provides an initial $500, then annual top-ups (e.g. $100/year) until age 15, if eligibility met. |
| Provincial Incentives (if applicable) |
Some provinces offer additional programs, grants, or tax credits to supplement the federal ones. Example: Québec’s Education Savings Incentive; BC’s provincial grants. |
Provinces have different eligibility, amounts, and rules. |
How an RESP Works — Key Features & Rules
- Contribution Limits
Lifetime contribution limit per beneficiary is $50,000. No set annual contribution max (but contributions beyond certain amounts won’t increase grant eligibility)
- Use of Funds
You can use RESP funds for many post-secondary expenses: tuition, books, school supplies, tools, sometimes room & board, transportation, etc., as defined by the plan and institution.
- Investment Growth & Tax Treatment
While money is in RESP, it grows tax-deferred. When withdrawn for eligible educational expenses, the earnings and grant amounts (Educational Assistance Payments, EAPs) are taxed in the hands of the student, who often pays little or no tax because they have low income or education credits. Principal contributions are returned tax-free.
- What Happens if Not Used for Education
If the beneficiary doesn’t go to post-secondary, or plan is closed without being used, there are rules: you can withdraw your contributions (principal), but you must repay any government grants. Also, earnings (investment income) withdrawn may become taxable and possibly subject to penalty. In some cases you may transfer to another eligible beneficiary.
- Eligibility for Grants
The child (beneficiary) must have a Social Insurance Number (SIN), be a resident of Canada, and the RESP must be opened with an eligible provider. For some grants (CLB, Additional CESG) the family income
must be below certain thresholds.
- Duration of RESP
Plans can stay open for many years: generally up to 31 years of contribution, and up to about 35 years total in some cases, depending on the provider.
Choosing an RESP Plan — Your Options
- Individual vs Family RESP
- Individual: For one beneficiary only.
-
Family: Contributions can be shared among multiple children, as long as they’re listed as beneficiaries in the plan.
Useful if children are different ages.
- Provider / Promoter
- Banks, credit unions, investment firms, and mutual fund companies.
- Compare: fees, investment options (GICs, mutual funds, ETFs), and customer support.
- How Often to Contribute
- Lump sum (one-time) or regular (monthly/yearly) contributions.
- Regular contributions can help with cash flow and compounding growth.
- Type of Investments
- Safe vs growth-oriented options, depending on your risk tolerance and how many years remain until your child starts school.
- As the time horizon shortens, many shift toward safer investments.
- Tracking Grants & Unused Grant Room
- If you don’t maximize the CESG grant in some years, there’s “unused grant room” you can catch up on later.
- Be mindful of deadlines and age limits so you don’t miss out.
Example Scenarios
- Scenario A — Starting Young
Emma opens an RESP when her daughter is born. She contributes $2,500/year. The government gives 20% back via CESG = $500.
Over 17 years, she contributes $42,500, government adds about $8,500+ (assuming extra grants and carry-forwards).
The investments grow, and by the time her daughter is ready for university, there’s a solid pool of funds including grants.
- Scenario B — Middle Income, Some Missed Years
John is 12 and his parents haven’t contributed much yet. They catch up, making larger contributions some years, using “unused grant room” so they still qualify for CESG top-ups.
They won’t get full lifetime max grants, but with contributions they will still benefit strongly.
- Scenario C — Lower Income / Eligible for CLB
A family qualifies for the Canada Learning Bond. Even if they can’t contribute much, they still get the CLB grant.
Over time, this extra government-funded money helps give the child a better start without placing huge burden.
Pros & Cons — Clear Comparison
| Advantages | Disadvantages / Things to Watch |
|---|---|
| Access to free government grants boosting your savings | If not carefully planned, you may not maximize grant eligibility (miss age cutoffs, not applying for grants) |
| Tax-advantaged growth | Investments can lose value; risk if you invest aggressively and timeline shortens |
| Flexible use for many post-secondary institutions / programs | If beneficiary doesn’t attend post-secondary, or changes plans, may have to repay grants or face tax on earnings |
| Anyone can contribute; funds grow; can shift to multiple children in family plan |
Contribution room limits; penalty or extra taxes if withdrawing earnings for non-education use; fees by provider may eat into gains |
Sample Costs / Growth Example
To make the potential very concrete, some sample numbers help:
| Profile | Contribution Pattern | Expected Government Grants | Estimated RESP Value at Start of Postsecondary |
|---|---|---|---|
| Parent starts at child’s birth, $2,500/year for 17 years | $42,500 contributed |
~$7,200 basic CESG + additional if eligible + maybe CLB | Depending on investment
return (say 5-6%), could grow to $60,000-$80,000+ |
| Someone starting later, age 12, doing catch up with $5,000/year | $25,000-$30,000 contributed by age 17 |
Government grants somewhat reduced but significant | RESP value maybe
$35,000-$45,000 depending on support & return rate |
- RESP FAQs
What is the maximum government grant amount my child can receive?
For the CESG it’s $7,200 lifetime per beneficiary. For low-income families, additional top-ups apply.
Also, eligible children may receive the Canada Learning Bond (CLB) (up to $2,000) if they qualify.
Is there a limit on how much money I can put into an RESP?
Yes — lifetime contribution limit per beneficiary is $50,000.
There is no fixed annual cap, but for grant maximization, $2,500/year is ideal for CESG.
When must RESP grants be used by?
CESG grants are available until the end of the calendar year the child turns 17.
There are age limits for eligibility.
RESP plans themselves can often remain open longer (up to 31 years contributions, ~35 years total depending on provider) for use.
What happens if the child doesn’t go to university / college?
You can withdraw your contributions tax-free. But government grants must generally be repaid.
Investment returns (earnings) may be taxable plus possibly a penalty. Sometimes another sibling can be named beneficiary.
Can someone else (grandparent, friend) contribute?
Yes — anyone can contribute, as long as the RESP is set up properly and the beneficiary is defined.
It’s flexible in that sense.
How We Helps with RESP Planning
Grant maximization
We help ensure you are getting all eligible federal & provincial grants (CESG top-ups, CLB, etc.).
Contribution scheduling
Plan regular contributions vs lump sums to optimize your cash flow and grant use.
Investment advice
Choosing what investments inside the RESP are right for your child’s timeline & risk tolerance.
Plan transfers / design adjustments
If changing beneficiary, consolidating family plans, etc.
Clarity & transparency
Breaking down fees, penalties, fine print so there are no surprises.
Open an RESP with us
we’ll set it up, take care of grants, investment plan,
contributions schedule.