RESP accounts are designed to help families save for a child’s post-secondary education. 

By investing in an RESP, you can make it easier for the beneficiary to continue their education and potentially build the foundation for a rewarding career. Whether it’s your own child, your niece or nephew, a family friend, or even yourself, an RESP helps address the costs of higher education.

If you’re looking for more comprehensive information about RESP contributions and accounts, RESP matching, or related topics, check out our in-depth RESP guide (pdf).

RESPs are available to any child who is a Canadian resident with a Social Insurance Number.

A parent, family member, or any other individual can open one at a credit union or other financial institution. 

 RESPs are popular because of some key benefits:

• Access to government grants. Contributions to an RESP make the account eligible for a partial match from the Canada Education Savings Grant. Every RESP account will earn an additional 20% in grant money on the first $2,500 paid into the account each year. Individuals and families with lower incomes can earn up to an additional $100 in CESG grant money each year.

• Even more government assistance. The Canada Learning Bond pays up to $2,000 to qualified beneficiaries with an RESP born after January 1, 2004, based on income level.
  
  
• Can hold qualified investments. Qualified investments, like Guaranteed Investment Certificates, can be placed in an RESP. These investments can generate additional income over time, sometimes more than is possible through just interest paid on cash deposits.
  
  
• Tax advantages. Contributions made to an RESP are taxable, but withdrawals made by students are generally taxed at a low level or not at all. Eligibility for tax (or the lack thereof) is determined by the student’s tax bracket, so some exceptions are possible. 

An RESP plan can hold numerous investment types other than just cash deposits. Even if you diversify your investment portfolio for an RESP, the same taxation rules still apply.

1. Make regular contributions

Making yearly contributions not only saves you money on tax, but it also leads to government grant assistance.

2. Make lump sum contributions

Lump sum contributions to Registered Education Savings Plans aren’t taxable. Use a TFSA Savings Account to grow your deposit and have your child only pay taxes on the interest earned and grant funds when withdrawing.

No, they’re not. However, money paid out of an RESP is paid and taxed to the student. Because most students make low to no income, they can usually withdraw RESP funds tax-free. 

The lifetime contribution limit is $50,000 per child. The Canada Education Savings Grant (CESG) will only match a lifetime maximum of $7,200 per child.

Through the Canada Education Savings Grant (CESG), the government will match 20% of each dollar you put into an RESP account (up to $2,500/year to a lifetime maximum of $7,200). That's thousands of dollars in free tuition!

Your RESP account for your child’s education is eligible for a withdrawal when your child finishes high school and enrols in a qualifying post-secondary educational institution. The funds from your RESP can also be used for other purposes, but in such cases, your earnings would be taxable.

If your child chooses not to go to college after they graduate, no problem:

• They have 35 years from the time the plan was opened to use the funds.

• A sibling going to school can use the funds.

• You can get your principal contributions back and roll over the interest into your RRSP.