RESPs: Everything you need to know

What is a Registered Education Savings Plan (RESP)?

The Registered Education Savings Plan (RESP) is a savings account designed to finance your child’s future post-secondary education: university, college, technical school, vocational school, etc.

Like RRSPs, TFSAs and FHSAs, the RESP is a tax-advantaged education savings account that lets you invest and grow tax-free. In fact, you don’t have to pay taxes on returns (capital gains, interest or dividends) as long as the money remains in the RESP.

In addition, RESP contributions are eligible for government grants from the federal and some provincial governments. Additional grants are also available for low-income families.

How does the RESP work?

An RESP is a contract between a subscriber and a promoter to make educational assistance payments (EAPs) to a beneficiary when he or she pursues a post-secondary education:

• Subscriber: This is the person who opens the RESP account and makes contributions. Although usually the child’s parents, there are no restrictions on who can be the subscriber (parent, grandparent, godparent, etc.). However, there are limitations based on the type of RESP you open. Note that an RESP can be opened by two subscribers (co-subscribers), for example both parents.
• Promoter: This is usually your financial institution or a group plan provider. The promoter administers the funds deposited in the RESP (contributions, grants and income/interest) and makes Educational Assistance Payments (EAPs) to the beneficiary when he or she pursues post-secondary education.
• Beneficiary: This is usually your child who will receive Educational Assistance Payments (EAPs) when he or she attends post-secondary school. A child can be the beneficiary of more than one RESP, as long as all accounts collectively respect the contribution limits.

Contributions belong to the subscriber. The grants and interest accumulated in the RESP belong to the beneficiary (the child). However, the subscriber may decide to pay his or her contributions to the beneficiary, if desired.

Once the beneficiary has been accepted by and is attending an eligible post-secondary institution, the promoter pays him or her Educational Assistance Payments (EAP).

Types of RESPs

There are three types of RESP accounts: Individual RESPs, Family RESPs and Group RESPs. The most common are the Individual RESP and the Family RESP, because they have fewer constraints and (generally) lower fees. Here’s a breakdown of how the different types of RESPs work…

Individual RESP

An individual RESP lets you save for the education of a single beneficiary. This plan is ideal for a family with just one child, or for someone who is not directly related to the beneficiary. You can open an individual RESP at a financial institution, chartered bank, credit union, trust company or insurance company. For example, with the Questrade online investment platform.

Family RESP

A family RESP lets you save for the education of several beneficiaries. It’s particularly advantageous if you have more than one child, as you can designate funds for several children and easily move money from one child to another (for example, if one of your children does not pursue a post-secondary education).

One condition is that the RESP subscriber must be related by blood or be the adoptive parent of the beneficiary. This includes your children, stepchildren, grandchildren and siblings.

As with the individual RESP, the family RESP can be opened at a financial institution. For example, with the online investment platform Qtrade.

Group RESP

Like the individual RESP, the group RESP is intended for a single child, who need not be related to you. Your contributions are pooled with several other subscribers, and are generally invested in low-risk, fixed-return investments.

The amount you receive depends on how much money is in the group account and how many children in the group will be entering post-secondary education. Note that each group RESP has its own rules and regulations. Examples of group plans are Kaleido (formerly Universitas) and Épargne CST.

While there are more conditions and restrictions with a group plan, it can be less stressful for many parents to determine an amount they want to save in the RESP and let the investments grow on autopilot.

Benefits of an RESP

Here are the main advantages of opening an RESP to save for your child’s post-secondary education.

Head start

Post-secondary education can be expensive. For a Canadian undergraduate student, the average cost of tuition and living expenses is $7,360 in 2024-2025. For a Canadian graduate student, the average cost is $7,662 in 2024-2025 (source).

By saving in an RESP, you’re giving your child a head start on his or her peers. They won’t have to think about student loans, and can use their training to pursue a fulfilling career. Therefore, you give them a valuable tool in their pursuit of success.

Tax-sheltered growth

When you save for your child’s education in an RESP, you save hundreds or even thousands of dollars through tax-free returns.

Although RESP withdrawals are subject to tax, a student’s income is generally so low that he or she will pay little or no tax. For example, if a student’s income is below the basic personal amount ($16,129 in Canada and $18,571 at Quebec in 2025), he or she will pay no tax on EAPs.

This gives you the opportunity to invest in a wide range of investments. These include exchange-traded funds (ETFs), mutual funds, stocks, bonds, guaranteed investment certificates (GICs) (Tangerine GICs or EQ Bank GICs) and more.

Government subsidies

RESP contributions are eligible for generous grants from both levels of government. These include the Canada Education Savings Grant(CESG), which provides up to $7,200, and the Quebec Education Savings Incentive(QESI), which provides up to $3,600. Additional grants are also available for low-income families, such as the Canada Learning Bond(CLB), which provides up to $2,000.

Flexibility

Post-secondary education is undoubtedly an excellent path to follow, but it’s not for everyone. RESPs offer excellent flexibility if you have a child who is not pursuing a post-secondary education.

In this case, you can name a new beneficiary (if you have more than one child). You can keep the RESP account open, in case your child decides to go to school later in life. As a last resort, you may decide to close the RESP, returning the grants to the government and transferring your contributions to your RRSP.

Finally, as we saw earlier, the RESP offers great flexibility in terms of investment choices.

Contribution Limit

The RESP has a lifetime lifetime contribution limit of $50,000 per beneficiary, but no annual contribution limit. However, government subsidies have annual limits and lifetime caps. To take full advantage of the government grants, you must contribute $2,500 per year to the RESP.

Catching up on Contributions

If you haven’t maximized your child’s RESP, you can make a catch-up contribution. However, catch-up contributions are limited to one year per calendar year.

Let’s take an example. Your child is born in 2024. You opened an RESP account and contributed only $1,000 in 2024. This year, in 2025, you can contribute $4,000 to the RESP: $2,500 for the current year (2025) and $1,500 for the catch-up year (2024). In this way, the $4,000 contribution will be fully eligible for government grants.

RESP Over-Contribution Penalty

Excess contributions have tax consequences for the subscriber. You will have to pay a tax of 1% per month until you withdraw the additional amount from the RESP account. In addition, this tax must be paid within 90 days of the end of the year in which you made the excess contributions.

RESP Grants

To encourage parents to save for their child’s post-secondary education in an RESP, the federal government and some provincial governments such as Quebec offer generous grants. These grants are generally calculated according to RESP contributions, and in some cases, according to household income. They are paid directly into the beneficiary’s RESP account.

CESG (Canada Education Savings Grant)

The Canada Education Savings Grant(CESG) allows you to obtain a maximum of $500 per year for an RESP. The maximum lifetime CESG is $7,200. In addition, children from middle- and low-income families can obtain up to $100 in additional subsidies.

The CESG is calculated in two stages:

1. Basic CESG: An eligible beneficiary receives up to 20% grant on the first $2,500 contributed to the RESP each year ($500).
2. Additional CESG: An eligible beneficiary from a middle- or low-income family can obtain an additional grant of 10% or 20% on the first $500 contributed to the RESP ($50 or $100).

To be eligible for the CESG, the child must be a Canadian resident, have a social insurance number, be 17 years of age or under, and be the beneficiary of an RESP.

CLB (Canada Learning Bond)

The Canada Learning Bond (CLB) provides low-income families with up to $2,000 for their child’s education, with no contribution required from the subscriber. It provides $500 in the first year and an additional $100 per year until the child turns 15, as long as the beneficiary is eligible.

What’s more, the CLB is retroactive. CLB amounts accumulate each year until the beneficiary turns 15. The CLB can be applied for by the primary guardian of an eligible child up to the age of 18. The child can then open an RESP and apply for the CLB until the age of 21.

Eligibility for the CLB is based on the adjusted family income of the child’s primary guardian:

To be eligible for the CLB, the child must be a Canadian resident, have a social insurance number, be the beneficiary of an RESP, be born on or after January 1, 2004, and come from a low-income family.

QESI (Quebec Education Savings Incentive)

The Quebec Education Savings Incentive (QESI) provides a maximum of $250 per year (lifetime maximum of $3,600). In addition, children from middle- and low-income families can receive an additional amount of up to $50 per year.

The QESI is calculated in two stages:

1. Basic QESI: An eligible beneficiary receives up to 10% grant on the first $2,500 contributed to the RESP each year ($250).
2. Additional QESI: An eligible beneficiary from a middle- or low-income family can obtain an additional grant of 5% or 10% on the first $500 contributed to the RESP ($25 or $50).

To be eligible for the QESI, the child must reside at Quebec on December 31 of the taxation year, be under 18 years of age, have a social insurance number and be a beneficiary of an RESP.

How do I open an RESP?

To open a Registered Education Savings Plan, you must choose an authorized RESP promoter, such as a financial institution, chartered bank, credit union, trust company or insurance company.

Of course, you must ensure that your child has a valid social insurance number, and supporting documents such as a birth certificate.

If you decide to open a self-administered RESP account with an online broker (individual RESP or family RESP) such as Questrade or Qtrade Investissement Direct, you’ll be able to invest RESP deposits in eligible investments such as exchange-traded funds (ETFs).

Authorized RESP Promoters

Not all financial institutions offer RESPs or can apply for government grants. A list of RESP promoters who administer federal grants is available on the Government of Canada website. The list includes

• Qtrade Direct Investing
• Questrade
• CIBC and CIBC Investor’s Edge
• National Investment Bank Inc.
• Royal Bank of Canada and RBC Direct Investing Inc.
• BMO Mutual Funds Inc. and BMO InvestorLine Inc.
• Desjardins Trust Inc.
• TD Asset Management Inc.
• Industrial Alliance Insurance and Financial Services Inc.
• The Toronto-Dominion Bank and TD Securities Inc.
• Wealthsimple

However, make sure the RESP promoter also participates in the QESI tax measure. A list of RESP providers who manage the QESI is available on the Revenu Quebec website. The example that comes up regularly is Wealthsimple, which is a federally authorized provider, but not at Quebec.

RESP-eligible investments

Like an RRSP, TFSA or FHSAthe RESP is not an investment. Rather, it’s a savings account in which you can invest:

• Exchange Traded Funds (ETFs)
• Guaranteed Investment Certificates (GICs)
• Stocks
• Government or Corporate obligations
• Asset allocation ETFs
• Mutual funds
• Money Market funds
• Etc.

RESP withdrawal rules and limits

Contributions belong to the subscriber (usually the parents), while grants and returns belong to the beneficiary (the child). When the beneficiary is enrolled in a qualifying post-secondary institution for full- or part-time studies, the subscriber may apply for a withdrawal.

There are two types of withdrawals to finance education:

1. Withdrawals for post-secondary education (PSE): the withdrawal of contributions made by the subscriber.
2. Educational Assistance Payment (EAP): the withdrawal of government grants and RESP investment income paid to the beneficiary.

Withdrawals for post-secondary education (PSE) are not taxable, since the subscriber did not receive any tax deductions when contributing to the RESP. There is no withdrawal limit for PSE.

Withdrawals from an EAP are taxable in the child’s name. However, with the tuition tax credit and a student’s generally low income, he or she will pay little to no tax. In 2023, EAP withdrawals are limited to $8,000 for a full-time student or $4,000 for a part-time student during the first 13 weeks of study. The beneficiary can then request a full withdrawal from the RESP in the form of an EAP.

Bottom Line

As we’ve seen in this guide, the most advantageous savings vehicle in Canada for saving for your child’s post-secondary education is the RESP. With an RESP, you can save up to $50,000 per child and obtain generous government grants. What’s more, this education savings account is an excellent opportunity to give your child a good start in life, considering the high cost of tuition and living expenses.

Frequently asked questions about RESPs