What Is an RESP?
A Registered Education Savings Plan (RESP) is a tax-sheltered savings account designed specifically to help Canadians save for a child's post-secondary education. Contributions grow tax-free inside the plan, and the government adds free money through the Canada Education Savings Grant (CESG) — making it one of the best investments a Canadian parent can make.
Unlike a TFSA or RRSP, an RESP has no annual contribution limit, but there is a lifetime contribution limit of $50,000 per beneficiary. You can open an RESP at most Canadian banks, credit unions, and investment brokerages, and you can name any Canadian resident as the beneficiary.
How the Canada Education Savings Grant (CESG) Works
The CESG is free government money added to your RESP based on what you contribute each year. The federal government contributes 20% on the first $2,500 you deposit per year per child — that's up to $500 free per year. Over 18 years, this can add up to $7,200 in free grants, not counting investment growth on those grants.
If you miss a year, you can catch up. The government allows one catch-up year at a time: contribute $5,000 in a single year and receive $1,000 in CESG (double the usual amount). Lower-income families may also qualify for the Canada Learning Bond (CLB), which provides additional grant money without requiring any contribution.
Quebec's Additional Grant — QESI
Quebec residents receive an additional provincial grant called the Quebec Education Savings Incentive (QESI). The QESI adds 10% on the first $2,500 contributed per year — up to $250 per year and $3,600 over the child's lifetime. This makes saving for education in Quebec even more valuable, with total annual grants potentially reaching $750 per child when both CESG and QESI are maximized.
When Can the Money Be Withdrawn?
RESP funds can be withdrawn when the beneficiary enrols in a qualifying post-secondary program — this includes university, college, trade schools, and many apprenticeship programs. Withdrawals of the grant and growth portions are called Educational Assistance Payments (EAPs) and are taxed in the student's hands, typically at a very low rate since students usually have little other income.
Your own contributions (not the grants or growth) can be withdrawn at any time without tax consequences, since they were made with after-tax dollars. If the beneficiary does not pursue post-secondary education, you have options: transfer to a sibling's RESP, transfer up to $50,000 of growth to your own RRSP (if you have room), repay the grants to the government, or close the plan and withdraw contributions.
Frequently Asked Questions
How much should I contribute to an RESP each year?
The magic number is $2,500 per year per child. That is the amount that maximizes the annual CESG grant of $500. Contributing more than $2,500 does not earn additional CESG in that year. If you can only afford less, contribute what you can — even $500/year earns $100 in free grant money. If you have extra funds, you can contribute up to the $50,000 lifetime limit, but only $2,500/year earns the CESG.
Can I open an RESP before my child is born?
No — you need the child's Social Insurance Number (SIN) to open an RESP, which means the child must already be born and have a SIN. However, you should apply for your child's SIN as soon as possible after birth and open the RESP within the first few months. Every year you delay is a potential $500 grant missed, so opening it early matters significantly over the full 18-year window.
What post-secondary programs qualify for RESP withdrawals?
Qualifying programs include full-time and part-time studies at universities, colleges, CEGEPs (Quebec), trade schools, apprenticeship programs, and many international institutions. The program must be at least three consecutive weeks long and require at least 10 hours of instruction per week. Your financial institution or the ESDC website can confirm whether a specific program qualifies before withdrawing funds.
What happens to the RESP if my child doesn't go to school?
You have several options. You can transfer the RESP to another child (sibling). You can keep it open until the child turns 35 in case they change their mind. You can transfer up to $50,000 of investment growth into your own RRSP if you have contribution room available. Or you can close the plan — your original contributions come back tax-free, government grants must be repaid, and the investment growth is added to your taxable income plus an additional 20% penalty tax. Keeping the RESP open as long as possible gives the most flexibility.
Can grandparents or others open an RESP for a child?
Yes. Any Canadian resident can open an RESP for a child — grandparents, aunts, uncles, family friends, or the parents themselves. However, the subscriber (the person who opens the plan) controls the account. If multiple people want to contribute, the easiest approach is for one person to open the RESP and others to contribute to it as gifts. Be mindful of the $50,000 lifetime limit — contributions from all sources combined must not exceed this amount per child.
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