Explore other account types:
What is an RESP?
A Registered Education Savings Plan (RESP) is an investment account specifically designed to save for a child's post-secondary education. The most important feature isn't the tax shelter — it's the Canada Education Savings Grant (CESG), which adds free government money to every dollar you contribute.
The government matches 20% of your annual RESP contributions up to $2,500/year — that's a guaranteed, immediate $500 grant per year, per child. No other investment in Canada guarantees a 20% instant return. It's essentially free money left on the table for any parent who doesn't open one.
Contribute $2,500 to your child's RESP → the government immediately adds $500 (20% CESG) → total invested: $3,000. Do this every year until your child is 17 and you collect up to $7,200 in free government grants. That's before any investment growth.
Canada Education Savings Grant (CESG)
The CESG is the central benefit of the RESP. Here's how it works in detail:
| Family Income | CESG Match Rate | Max Annual Grant | Lifetime Max |
|---|---|---|---|
| All families (base) | 20% on first $2,500 | $500/year | $7,200 |
| Under ~$55,867 (2026) | +20% on first $500 | +$100 extra | +$2,000 |
| $55,867–$111,733 (2026) | +10% on first $500 | +$50 extra | +$1,000 |
Income thresholds adjusted annually. Lower-income families can receive additional grants through the Canada Learning Bond — up to $2,000 with no contribution required.
RESP Contribution Rules
- Lifetime limit: $50,000 per beneficiary
- No annual limit — but CESG only matches up to $2,500/year ($500 grant)
- Carry-forward: Unused CESG room carries forward — one year of catch-up is allowed per year
- Deadline: Contributions eligible for CESG must be made before the child turns 18
- Account stays open for 36 years after opening
Many parents contribute a large lump sum in year one to "max out" the RESP — but CESG only matches $2,500 per year. Spreading contributions over multiple years captures more government matching. Contribute $2,500/year to get the maximum annual grant.
How RESP Withdrawals Work
When your child enrolls in a qualifying post-secondary program (university, college, trade school, apprenticeship), they can make withdrawals. These are called Educational Assistance Payments (EAPs) and include the grants and investment growth.
EAPs are taxed in the student's hands — not the subscriber's. Since most students have very low income, they often pay little or no tax on these withdrawals. Your original contributions (not growth or grants) come back to you tax-free.
What If Your Child Doesn't Go to School?
Options include: transferring to a sibling's RESP, rolling up to $50,000 of RESP growth into your own RRSP (if you have room), or withdrawing as income. The grants must be returned to the government. This is why it's generally worth opening an RESP even with uncertainty — the investment growth is still yours to use.
✅ Advantages
- Free government grants (CESG)
- Tax-deferred growth
- Withdrawals taxed in student's hands
- Canada Learning Bond for low-income families
- 36-year account lifetime
❌ Limitations
- Grants must be repaid if not used for school
- Only for qualifying education programs
- $50,000 lifetime contribution cap
- Somewhat complex withdrawal rules
How to Open an RESP in Canada
- Choose a brokerage — Wealthsimple or Questrade are both strong choices
- Click a referral link above to get your bonus
- Select "RESP" as the account type
- Provide the beneficiary's (child's) SIN along with your own
- Make your first $2,500 deposit to capture the $500 CESG this year
Also consider opening a TFSA for yourself while you're setting up accounts — it takes 2 extra minutes and gets you the $25 referral bonus.