For parents in Canada, one of the smartest ways to prepare for your child’s future is through a Registered Education Savings Plan (RESP). It’s a government-supported account designed to help families save for post-secondary education. With grants, tax-deferred growth, and flexible contribution options, the RESP is one of the most powerful tools available. Here’s everything you need to know in 2025.
What Is an RESP?
An RESP is a tax-advantaged savings account for your child’s education.
- You contribute with after-tax dollars.
- The money grows tax-free inside the plan.
- Withdrawals for education are taxed in your child’s hands (often at a very low rate).
- The government adds grants and bonds to boost your savings.
Key Benefits of an RESP
- Canada Education Savings Grant (CESG)
- 20% match on contributions, up to $500 per year.
- Lifetime maximum of $7,200 per child.
- Lower-income families may qualify for extra CESG.
- Canada Learning Bond (CLB)
- For low-income families.
- Up to $2,000 per eligible child.
- Tax-deferred growth
- Contributions grow without annual tax drag.
- Withdrawals taxed in the child’s lower bracket.
- Flexibility
- Funds can be used for university, college, trade schools, or apprenticeships.
How Much Can You Contribute?
- Lifetime maximum contribution per child: $50,000.
- No annual limit, but CESG is capped at $500 per year.
- You can catch up unused CESG by contributing more in future years (max $1,000 grant in a single year).
RESP Grants & Bonds Summary
| Program | Who Qualifies | Amount |
|---|---|---|
| CESG | All contributors | 20% match, up to $500/year, $7,200 lifetime |
| Additional CESG | Lower-income families | +10–20% on first $500 contributed |
| CLB | Low-income families | $500 initial + up to $2,000 total |
(Image placeholder: simple infographic—cat holding a coin with a government building behind it. ALT: “RESP grants and bonds boost savings.”)
Types of RESPs
- Individual Plan
- One beneficiary (your child, grandchild, or even yourself).
- Family Plan
- Multiple children can share the funds (must be related by blood or adoption).
- Useful for families with more than one child.
- Group Plan
- Contributions pooled with other investors.
- Stricter rules, less flexible, often higher fees.
- Generally less recommended today.
How to Open an RESP in Canada
- Choose a provider: banks, credit unions, robo-advisors, or online brokers.
- Provide SIN numbers for you and your child.
- Decide on investment options:
- Low-cost ETFs (popular choice)
- Mutual funds (watch fees)
- GICs (safe but lower return)
- Contribute regularly to maximize CESG.
Investment Strategy for RESPs
- Early years (0–9): Higher equity exposure (stocks, ETFs) for growth.
- Middle years (10–14): Shift to balanced mix (stocks + bonds).
- Later years (15–18): Move to conservative (GICs, bonds, HISAs) to protect capital.
This way, the money is there when tuition bills arrive.
What If Your Child Doesn’t Go to School?
Options:
- Transfer RESP to another child (if family plan).
- Withdraw contributions (tax-free, but grant money must be returned).
- Transfer up to $50,000 to your RRSP (if you have room).
RESP Withdrawal Basics
- Post-Secondary Education (PSE) Withdrawals → your contributions, tax-free.
- Education Assistance Payments (EAPs) → grants + growth, taxed in child’s hands.
- Plan withdrawals strategically to keep the child in a low tax bracket.
Common RESP Mistakes to Avoid
- Starting late → you miss out on grants and compounding.
- Contributing irregularly → harder to catch up on CESG.
- Choosing high-fee group RESPs → limits growth.
- Forgetting to adjust investments as the child approaches school age.
Step-by-Step RESP Action Plan
- Open an RESP as soon as your child has a SIN.
- Set up automatic contributions (e.g., $200/month).
- Invest in low-fee, diversified ETFs or mutual funds.
- Track CESG/CLB received yearly.
- Adjust asset mix as your child nears graduation.
- Plan withdrawals smartly to minimize tax.
Example: $2,500 per Year Strategy
If you contribute $2,500 per year, you’ll receive the maximum CESG ($500) each year.
- After 18 years: $45,000 in contributions + $7,200 CESG + investment growth.
- With a 5% return: potential value ≈ $70,000+.
That’s enough to cover a significant portion of tuition, books, and living costs.
Final Thoughts
The RESP is one of the most generous savings tools in Canada. With grants, tax-sheltered growth, and flexibility, it’s a no-brainer for parents. Start early, contribute regularly, and let compounding do its job—your child’s future self will thank you.