Registered Education Savings Plan (RESP)

The Canadian government provides the Canada Education Savings Grant (CESG), which matches 20% of annual RESP contributions up to $500 per year. Over a child’s lifetime, the maximum CESG amount is $7,200. Additional grants may be available depending on family income and province.

If your child does not attend a qualifying post-secondary institution, your original contributions can be withdrawn tax-free. Government grants must generally be returned, and investment earnings may be subject to taxes and additional penalties. Alternative options may also be available depending on your situation.

Your original contributions are not taxed when withdrawn because they were made with after-tax dollars. Educational Assistance Payments (EAPs), which include grants and investment earnings, are taxable to the student. Since students often have low income, taxes are usually minimal.

The earlier you open an RESP, the more time your contributions have to grow through compound investment returns. Starting early also helps maximize government grant opportunities. Many parents open an RESP shortly after their child is born.

Yes, you can open an individual RESP for yourself if you plan to pursue post-secondary education in the future. There is no age limit for opening an RESP. However, government grant eligibility may vary based on your circumstances.

There is no annual contribution limit for RESPs. However, to receive the maximum CESG, many families contribute $2,500 per year per child. The lifetime contribution limit is $50,000 per beneficiary.

Parents, grandparents, relatives, or even family friends can open an RESP for a child. The beneficiary must have a valid Social Insurance Number (SIN). Family and individual RESP plans are available depending on your needs.

Yes, multiple RESPs can be opened for the same beneficiary. However, the total lifetime contribution limit of $50,000 applies across all accounts combined. It’s important to coordinate contributions to avoid over-contributing.