RESP Contributions in Canada: A Simple Guide for Parents and Grandparents

If you're saving for a child's future in Canada, the RESP is usually the first account worth understanding, mostly because the government adds free money on top of what you contribute. Here's how it actually works.

What an RESP is

An RESP (Registered Education Savings Plan) is a tax-advantaged account designed specifically to help save for a child's post-secondary education. Contributions aren't tax-deductible, but the investment growth inside the account is tax-deferred, and withdrawals for education are generally taxed in the student's hands, usually at a much lower rate than the contributor's.

The big draw: free government money

The main reason RESPs are so popular is the Canada Education Savings Grant (CESG):

• The government matches 20% of annual contributions, up to $500 per year, per child
• That means contributing $2,500 a year gets you the maximum $500 grant that year
• There's a lifetime CESG maximum of $7,200 per child
• Lower-income families may qualify for an additional grant on top of the base CESG

This is money you do not get if you save outside an RESP. It is a grant, not an investment return: the money in the plan can still go up or down, and the grant generally has to be repaid if it is not eventually used for education.

Contribution limits

• No annual contribution limit, but you only get the CESG match on the first $2,500 contributed per year
• Lifetime contribution limit: $50,000 per child
• Contributions can come from parents, grandparents, or anyone else, multiple family members can contribute to the same RESP

Who can open one, and for whom

• A parent, grandparent, or other relative can open an RESP for a child
• Individual RESP: for one beneficiary
• Family RESP: can include multiple children (usually siblings), allowing more flexibility if one child doesn't pursue post-secondary education
• The child needs a Social Insurance Number (SIN) before an RESP can be opened in their name

Catching up if you started late

If you didn't contribute in earlier years, you can catch up, the CESG allows you to claim one prior year of unused grant room per year, up to the $500 annual maximum (so up to $1,000 in a catch-up year on a $5,000 contribution). This makes it worth starting even if a child is already several years old.

What happens if the money isn't used for education

If the child doesn't pursue post-secondary education, a few options apply:

• The RESP can stay open for up to 36 years, giving plenty of time in case plans change
• It can sometimes be transferred to a sibling's RESP
• Contributions can be withdrawn tax-free (since they weren't deducted going in), though the CESG portion generally has to be returned to the government if unused

A note for grandparents specifically

Grandparents often contribute to an RESP already opened by the parents, rather than opening a separate one, this keeps contributions consolidated and avoids splitting the CESG matching across multiple accounts unnecessarily. A quick check-in with the parents on whether an RESP already exists is worth doing before contributing elsewhere.

The bottom line

• RESP = the primary Canadian account for education savings, with government grant matching up to $7,200 per child
• Contribute early and consistently, even $2,500/year captures the full annual grant
• Coordinate with other family members contributing, so the CESG match isn't split or missed