Updated March 2025 · 9 min read

RESP Guide 2025: Saving for Your Child's Education

RESP at a Glance: No annual contribution limit · $50,000 lifetime limit · Government adds 20% on first $2,500/year (up to $500/year in CESG) · $7,200 lifetime grant max · Tax-free growth · Withdrawals taxed in student's hands (usually very low tax)

The Registered Education Savings Plan (RESP) is Canada's dedicated education savings vehicle — and one of the best investments any parent can make. The government's Canada Education Savings Grant (CESG) provides an automatic 20% return on your contributions, making it one of the few guaranteed government-subsidized investment accounts available to Canadians.

How the RESP Works

You open an RESP for a beneficiary (your child or grandchild), contribute money, and the government adds grants on top. The money grows tax-sheltered inside the account. When the beneficiary enrolls in a qualifying post-secondary program, they withdraw the funds — and since students typically have low income, the tax on withdrawals is minimal or zero.

RESP Key Facts 2025

Feature	Details
Annual contribution limit	None (but CESG is only paid on first $2,500/year)
Lifetime contribution limit	$50,000 per beneficiary
CESG rate	20% on first $2,500/year = $500/year
CESG lifetime maximum	$7,200 per beneficiary
CESG carry-forward	Up to $1,000/year in catch-up grants (if prior years missed)
Account holder	Parent, grandparent, or other subscriber
Beneficiary age limit for grants	17 (with conditions after age 15)
Tax on growth	None while in RESP
Tax on withdrawal	Taxed in student's hands (Educational Assistance Payments)

The CESG: A Guaranteed 20% Return

The Canada Education Savings Grant is the most compelling reason to open an RESP immediately. The government deposits 20% of your annual contributions (on the first $2,500) directly into the RESP as a grant. That's an automatic, guaranteed 20% return before any investment growth — impossible to match elsewhere.

Maximum annual CESG: $500 (20% of $2,500)
Maximum lifetime CESG per beneficiary: $7,200

Catch-Up Grants: If you missed contributing in prior years, you can catch up. The government allows up to $1,000 in CESG per year (by contributing $5,000 — current year + one prior year). Open the RESP as early as possible to maximize grant eligibility years.

Additional Grants: CLB and Provincial

Beyond the CESG, lower-income families may qualify for:

Canada Learning Bond (CLB): Up to $2,000 total for children from lower-income families. No contributions required — the government deposits it automatically. Families receiving the Canada Child Benefit (CCB) may qualify.
British Columbia Training and Education Savings Grant (BCTESG): $1,200 one-time grant for BC residents born after January 1, 2006.
Quebec Education Savings Incentive (QESI): Up to $3,600 lifetime for Quebec residents.
Saskatchewan Advantage Grant for Education Savings (SAGES): 10% on first $2,500/year (currently suspended — check current status).

See our detailed RESP Grants guide for full eligibility details.

RESP Types

Type	Description	Best For
Individual RESP	One beneficiary; any subscriber can open	One child
Family RESP	Multiple beneficiaries (must be related by blood or adoption)	Multiple children; share grants and earnings
Group RESP	Pooled with other subscribers; sold by scholarship plan dealers	Generally avoid — high fees, restrictive rules

Avoid Group RESPs: Group RESPs (sold by companies like Heritage or Children's Education Funds) often charge high enrolment fees and have very restrictive withdrawal rules. A self-directed individual or family RESP at a discount broker is almost always superior.

What to Invest in an RESP

RESPs can hold ETFs, stocks, bonds, GICs, and mutual funds. The best approach:

Under 10 years to school: Growth-oriented ETF (XGRO or VGRO)
5–10 years to school: Balanced ETF (XBAL or VBAL)
Under 5 years to school: Conservative ETF or GICs — protect the capital
Under 2 years to school: High-interest savings or short-term GICs

RESP Withdrawals: How They Work

When your child enrolls in a qualifying post-secondary program (college, university, trade school, etc.), they can receive Educational Assistance Payments (EAPs) from the RESP. EAPs include government grants and investment earnings — these are taxed in the student's hands, typically at very low rates.

Your original contributions (Post-Secondary Education payments, or PSE) can be withdrawn tax-free at any time.

If Your Child Doesn't Attend Post-Secondary

Grants (CESG, CLB) must be returned to the government
Investment earnings can be transferred to your RRSP (up to $50,000 if you have room) or withdrawn as income (plus 20% penalty tax)
Original contributions are returned to you tax-free

Where to Open an RESP

Questrade — self-directed, free ETF purchases, family and individual RESPs
Justwealth — specialized RESP target-date portfolios
Wealthsimple — self-directed and managed RESP options
Major banks — convenient but often higher-fee mutual funds

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