This guide answers the most common questions Canadians have about Registered Education Savings Plans (RESPs), from contribution limits and government grants to withdrawal rules.
The basics
What is an RESP and how does it work in Canada?
A Registered Education Savings Plan (RESP) is a tax-advantaged savings account designed to help Canadians save for a child's post-secondary education. The plan allows contributions to grow on a tax-deferred basis until the funds are withdrawn to pay for education.
Here's how it works: a subscriber (typically a parent, grandparent, or other family member) opens an RESP and names a beneficiary (the child). Contributions grow tax-free inside the account. When the beneficiary enrolls in a qualifying post-secondary program, the funds can be withdrawn to cover education costs like tuition, books, and living expenses. You can read the government's overview of how an RESP works for more detail.
The major advantage of an RESP over other savings vehicles is access to government grants. The federal government matches a portion of your contributions through the Canada Education Savings Grant (CESG).
What can an RESP be used for?
RESP funds can be used for a wide range of post-secondary education expenses at qualifying institutions. These include:
Tuition and fees: course fees at colleges, universities, trade schools, and other designated institutions
Books and supplies: textbooks, course materials, and required equipment
Housing: residence fees, rent, and living expenses
Transportation: costs to travel to and from school
Technology: computers and other equipment needed for studies
There are no restrictions on how RESP withdrawals must be spent once the beneficiary is enrolled in a qualifying program. Qualifying programs extend beyond universities and colleges to include CEGEPs, trade schools, and apprenticeship programs. See how the RESP and related benefits work together for eligible expenses.
Where can you open an RESP, and how do you compare plans?
RESPs can be opened through various financial institutions across Canada, including:
Banks and credit unions: offer savings accounts and guaranteed investment certificates (GICs)
Online brokerages: offer self-directed accounts with access to ETFs, stocks, and other investments, plus automated/robo investing and professionally managed portfolio options
Certified financial planners: provide personalized financial advice and tailored planning for goals like retirement, taxes, and estate planning
Group plan providers: pool contributions with other subscribers
When comparing plans, consider these factors:
Fees: account fees, trading commissions, and management expense ratios
Investment options: range of investments available (GICs, mutual funds, ETFs, individual stocks)
Flexibility: ability to adjust contributions and investment strategy
Customer service: quality of support when you need help
The beneficiary must have a valid Social Insurance Number (SIN) to receive government grants. You can apply for a child's SIN at Service Canada free of charge.
Rules and limits
What are the contribution limits, and how does the government match (CESG) work?
The lifetime RESP contribution limit is $50,000 per beneficiary. There is no annual contribution limit — you could contribute the full $50,000 in one year if you wanted. However, doing so wouldn't maximize your government grants.
The CESG matches 20% of your annual contributions, up to $500 per year per child, until the end of the year they turn 17, provided the contribution requirements have been met. To receive the full $500 annual grant, contribute at least $2,500. The lifetime maximum CESG per beneficiary is $7,200.
If you miss contributing in early years, unused CESG room carries forward. You can receive up to $1,000 in CESG in a single year by contributing 5,000(500 for the current year plus $500 from the carried-forward room). You can get more information on how RESP contributions work from the Canada Revenue Agency (CRA).
Key numbers to remember:
Limit | Amount |
|---|---|
| Lifetime contribution limit (per child) | $50,000 |
| Annual CESG maximum | $500 |
| Contribution to earn full annual CESG | $2,500 |
| Lifetime CESG maximum (per child) | $7,200 |
Contributions exceeding $50,000 lifetime are subject to a 1% penalty tax per month on the excess amount until it's withdrawn.
What is the difference between the additional CESG and the standard CESG?
The standard CESG provides a 20% match on the first $2,500 contributed annually, for a maximum of $500 per year. Every eligible family receives this rate, regardless of income.
Lower- and middle-income families may qualify for an additional CESG, which is an additional match on the first $500 contributed each year:
An extra 20% on the first $500 for families in the lower income tier — up to $600 in CESG for the year
An extra 10% on the first $500 for families in the middle income tier — up to $550 in CESG for the year
This means eligible families can receive up to $100 more per year. Additional CESG eligibility is based on the primary caregiver's adjusted family net income, requires their SIN, and the income thresholds are adjusted annually.
RESP eligibility: who qualifies and what are the requirements?
To open an RESP and receive government grants, the beneficiary must:
Be a Canadian resident
Have a valid Social Insurance Number (SIN)
To receive the Canada Education Savings Grant (CESG), additional age-based rules apply:
Beneficiaries aged 16 or 17 can only receive the CESG if specific contribution requirements were met in prior years: at least $2,000 must have been contributed (and not withdrawn) before the end of the year the beneficiary turned 15, or at least $100 in annual contributions in any four years before the end of that year.
There's no minimum age to become a beneficiary — parents can open an RESP shortly after a child is born. The RESP must be collapsed by the end of its 35th year.
The Canada Learning Bond (CLB) provides additional support for children from lower-income families. The CLB deposits up to $2,000 in government money into an RESP — an initial $500 plus $100 for each year of eligibility, up to and including age 15. No personal contributions are required to receive the CLB.
Structural questions
Should you use an individual or family RESP, and why?
The main difference: an individual RESP is for one child, while a family RESP can include multiple children (siblings) who share the savings.
Individual RESP:
One beneficiary per plan
Anyone can open an individual RESP for anyone (including non-relatives)
No age limit for adding a beneficiary
Contributions and grants are earmarked for that specific child
Family RESP:
One or multiple beneficiaries, but all must be related to the subscriber by blood or adoption (siblings)
Beneficiaries must be under 21 when named to the plan
Unused grants can be shared among siblings (up to each child's lifetime maximum)
Provides flexibility if one child doesn't pursue post-secondary education
For families with multiple children, a family RESP offers the advantage of reallocating funds if one child decides not to pursue post-secondary education. For single-child families, or when a non-relative (like an aunt, uncle, or family friend) wants to contribute, an individual RESP may be the simpler choice.
Can grandparents contribute to an RESP, and are there restrictions?
Yes, grandparents can contribute to an RESP. They have two options:
Open their own RESP for the grandchild (as subscriber, naming the grandchild as beneficiary)
Contribute to an existing RESP opened by the child's parents
Important considerations:
The $50,000 lifetime limit applies across all RESPs for that child, regardless of who opened them. If a child has both a family RESP from parents and an individual RESP from grandparents, the combined contributions cannot exceed $50,000 (see what are the contribution limits).
Grandparents can open a family RESP only if the beneficiaries are their biological or adopted grandchildren (and those grandchildren are siblings).
Coordination is essential — multiple contributors to separate RESPs must track total contributions to avoid over-contribution penalties.
Can an RESP be transferred to another provider, and what is required?
Yes, RESPs can be transferred between financial institutions. The process typically involves:
Opening a new RESP account at the receiving institution
Completing a transfer request form
Providing details about the existing RESP (institution, account number, beneficiary information)
The receiving institution coordinates the transfer of funds and grant entitlements
Transfers generally preserve all accumulated grants and contribution history. There should be no tax consequences for a properly executed transfer. However, some providers may charge transfer-out fees, so check with your current institution before initiating a transfer.
What happens to RESP funds if the child doesn't pursue post-secondary education?
If the beneficiary doesn't pursue post-secondary education, you have several options:
Wait: the RESP can remain open for up to 35 years. The beneficiary may decide to return to school later.
Transfer to a sibling: in a family RESP, funds can be redirected to another eligible sibling.
Change the beneficiary: in an individual RESP, you can name a new beneficiary (such as a younger sibling or another family member) without penalty if they're related by blood or adoption.
Transfer to an RRSP: if you have Registered Retirement Savings Plan (RRSP) contribution room, you can transfer up to $50,000 of RESP earnings to your own RRSP. Grants must be repaid to the government.
Withdraw as an Accumulated Income Payment (AIP): RESP earnings can be withdrawn in cash, but this carries significant tax consequences — the subscriber pays their marginal tax rate plus an additional 20% (12% in Quebec) on the investment growth. All government grants must be repaid.
Original contributions can always be withdrawn tax-free by the subscriber since they were made with after-tax dollars.
Withdrawals
At what age can you withdraw from an RESP, and what are the rules around grants?
There is no minimum age for RESP withdrawals — you can start withdrawing as soon as the beneficiary enrols in a qualifying post-secondary program. The program must be at a designated educational institution (college, university, trade school, or vocational program).
RESP withdrawals come in two main types:
Post-Secondary Education (PSE) payments:
Return of the subscriber's original contributions
Tax-free (since contributions were made with after-tax dollars)
Can be paid to either the subscriber or the beneficiary
No withdrawal limits
Educational Assistance Payments (EAP):
Include government grants (CESG, CLB, provincial incentives) and investment earnings
Can only be paid to the beneficiary
Taxable in the student's hands
During the first 13 weeks of enrolment: capped at $8,000 for full-time students, $4,000 for part-time students
After 13 weeks: no withdrawal limits for full-time students
Since most students have low income and can claim tuition tax credits, they often pay little or no tax on EAP withdrawals. A common strategy is to withdraw EAP first while the student's income is low, then take PSE (tax-free contributions) in later years if needed.
Proof of enrolment is required for withdrawals — typically a letter of acceptance, course confirmation, or registration documents showing the student's name and program details.
The bottom line
RESP pros and cons
Pros:
Free government money: the CESG matches 20% of contributions up to $500 per year — an instant return on your investment
Tax-deferred growth: investments grow without being taxed until withdrawal
Low tax on withdrawals: EAPs are taxed in the student's hands, usually at a lower rate
Additional grants for lower-income families: the additional CESG and Canada Learning Bond provide extra support
Flexible investment options: choose from GICs, mutual funds, ETFs, and other investments depending on your provider
Long time horizon: up to 35 years for funds to grow
Cons:
Restricted use: funds must be used for qualifying post-secondary education, or grants are repaid and earnings face penalties
Contribution limit: the $50,000 lifetime cap per beneficiary may not be enough for some families
Grant limits: CESG is capped at $7,200 per beneficiary over their lifetime
Complexity: rules around withdrawals, grant eligibility, and plan types can be confusing
No tax deduction: unlike RRSP contributions, RESP contributions don't reduce your taxable income
For most Canadian families, the combination of free grant money and tax-deferred growth makes the RESP an effective way to save for a child's education. The key is starting early, contributing consistently to maximize grants, and understanding the withdrawal rules before your child heads off to school.
