Understanding RESP: The Best Way to Save for Your Child’s Education

A Registered Education Savings Plan (RESP) is one of the best tools for saving for a child’s post-secondary education. The Canadian government provides incentives like the Canada Education Savings Grant (CESG) to help your savings grow faster.

Jason Bai

2/19/20251 min temps de lecture

How Does an RESP Work?

An RESP is an investment account that allows contributions to grow tax-free until they are withdrawn for educational purposes. The government matches a portion of contributions through the CESG, providing an extra boost to your savings.

Key Benefits of an RESP

Government Grants: The CESG provides a 20% match on annual contributions, up to $500 per year per child (with a lifetime limit of $7,200).
Tax-Free Growth: Investment earnings grow tax-free until withdrawal.
Flexible Use: Funds can be used for tuition, books, accommodation, and other education-related expenses.

Maximizing Your RESP Contributions

Start Early: The earlier you begin contributing, the more time your investments have to grow.
Max Out the CESG: To receive the full $7,200 government grant, contribute at least $2,500 per year.
Consider Family RESPs: If you have multiple children, a family RESP allows you to allocate funds flexibly among them.

What Happens If Your Child Doesn’t Go to School?

Transfer to an RRSP: You can transfer up to $50,000 of unused RESP savings into your RRSP if you have contribution room.
Withdraw with Tax Penalties: Contributions can be withdrawn tax-free, but investment earnings may be subject to penalties.

Bottom Line: An RESP is a powerful savings tool for education. Start early, contribute regularly, and maximize government grants to build a solid financial foundation for your child’s future.