RESP — Registered Education Savings Plan
Last updated April 24, 2026 · By Evermore Private Wealth · Registered Account
RESP — Registered Education Savings Plan. A Registered Education Savings Plan (RESP) is a Canadian tax-sheltered account designed to fund post-secondary education. The federal government adds a 20% Canada Education Savings Grant (CESG) on the first $2,500 contributed each year — up to $7,200 of free grant money per child over the lifetime of the plan.
Source: CRA
Source: Employment and Social Development Canada
Source: ESDC
How the RESP works
Contributions are not tax-deductible, but investments inside the plan grow tax-deferred. When the child enrols in qualifying post-secondary education, withdrawals are split into two streams: refund of contributions (no tax) and Educational Assistance Payments or EAPs (taxable to the student, who is usually in the lowest bracket).
The CESG is paid annually on the first $2,500 of contributions per child (or $5,000 if catching up unused room from prior years), to a lifetime maximum of $7,200. Lower-income families also receive an additional CESG of 10–20% on the first $500. The Canada Learning Bond adds up to $2,000 more for families on the National Child Benefit Supplement.
What if the child does not attend post-secondary?
Three options: (1) keep the plan open up to 35 years in case they enrol later; (2) transfer up to $50,000 of accumulated income to your RRSP if you have room; or (3) collapse the plan and pay tax plus a 20% penalty on the income portion. Original contributions are always returned tax-free regardless. CESG money must be repaid if not used by the beneficiary or a sibling.
What this means for HNW Canadian families
For HNW grandparents, the RESP is an under-used estate-planning tool. Opening a plan for each grandchild and front-loading $14,000 in year one (to capture the current and one prior CESG year) compounds for 18 years before withdrawal. Across three or four grandchildren, that is $200k+ of after-grant capital that exits your estate, grows tax-sheltered, and is taxed in the grandchild's hands — typically at 0% during their student years. We model this against your overall estate freeze strategy.
Worked example — Maximum RESP at birth
A child is born in 2026. Parents contribute $2,500 every year for 18 years ($45,000 total) and capture $7,200 of CESG. At a 6% average return, the plan holds approximately $95,000 at age 18 — enough to fund four years of in-province tuition and residence at most Canadian universities, with the EAP withdrawals taxed in the student's hands at near-zero rates.
Common Questions
What is the lifetime RESP contribution limit?
The lifetime contribution limit is $50,000 per beneficiary (per child). There is no annual limit, but only the first $2,500 of contributions per year attracts the standard 20% Canada Education Savings Grant — up to a $7,200 lifetime CESG cap.
Who can contribute to an RESP?
Anyone — parents, grandparents, family friends — can open or contribute to an RESP. There can only be one subscriber (or one couple as joint subscribers) per plan, but multiple plans can name the same child as beneficiary.
What happens to the CESG if my child does not attend post-secondary?
Unused CESG must be repaid to the federal government. Your original contributions are always returned to you tax-free. Income earned in the plan can be transferred to your RRSP (up to $50,000 of room) or withdrawn as an Accumulated Income Payment, which is taxed at your marginal rate plus a 20% surcharge.
Is the RESP withdrawal taxable?
Withdrawals come in two streams. The return of your original contributions is tax-free. Educational Assistance Payments — which include CESG and accumulated growth — are taxable to the student, who almost always pays little or no tax thanks to the basic personal amount and tuition credits.
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