Updated: April 2025  |  bremo.io financial guides

Opening an RESP for a Newborn in Canada — Complete Guide

Opening a Registered Education Savings Plan (RESP) is one of the best financial moves you can make for your newborn. The federal government adds free money through grants, and the investment grows tax-sheltered until your child needs it for post-secondary education. The earlier you open one, the more time compound growth has to work in your favour.

What Is an RESP?

An RESP is a tax-advantaged savings account specifically for education. Contributions are made with after-tax dollars, grow tax-free inside the account, and are taxed in the student's hands when withdrawn (typically at a very low rate since students have little income). The government adds grants to boost your contributions.

The Canada Education Savings Grant (CESG)

The CESG is the primary government grant on RESP contributions:

• Basic CESG: 20% on the first $2,500 contributed per year = up to $500/year
• Lifetime CESG maximum: $7,200 per child
• Additional CESG: For lower-income families, the grant rate increases to 30% or 40% on the first $500 of annual contributions

The grant is deposited directly into the RESP by the federal government after each contribution. You need a Social Insurance Number for your child to receive it.

Lifetime Contribution Limit

The lifetime contribution limit is $50,000 per beneficiary (your child). There's no annual contribution limit, but the CESG is only paid on the first $2,500 per year. Contributing more than $2,500/year doesn't attract additional grants, but the extra money still grows tax-sheltered.

How to Open an RESP

1. Get your child's SIN from the CRA (or via the provincial Vital Statistics process)
2. Choose a provider: bank, credit union, robo-advisor, or online brokerage
3. Open an individual RESP (for one child) or family RESP (for multiple children)
4. Apply for the CESG grant — your provider will help with this paperwork
5. Start contributing — even small amounts benefit from the grant

Best RESP Accounts in Canada

Options for opening an RESP include:

• Banks (TD, RBC, BMO, Scotia, CIBC): Convenient, but often limited investment options and higher fees
• Credit unions: Similar to banks, often good service
• Robo-advisors (Wealthsimple, Questrade): Low fees, diversified ETF portfolios, easy to set up
• Self-directed (Questrade, National Bank Direct): Maximum investment flexibility, lowest fees

For most new parents, a robo-advisor RESP offers the best balance of simplicity and low cost.

How Much Should You Contribute?

Contributing $2,500/year maximizes the annual CESG grant. Over 18 years:

• $2,500/year × 18 years = $45,000 in contributions
• Plus $7,200 in CESG grants
• Plus investment growth (at 5% average annual return, the account could reach $85,000+)

If you can't contribute $2,500/year right away, start with what you can. The CRA allows "catch-up" — unused CESG room carries forward, but only one year's worth of catch-up can be used per year.

What If Your Child Doesn't Go to Post-Secondary School?

The contributions are always yours and can be returned. The CESG grants go back to the government. Investment growth can be transferred to your RRSP (up to $50,000) or withdrawn as taxable income plus a 20% penalty on the growth portion. A family RESP (covering multiple children) gives more flexibility.