1. What an RESP actually is
A Registered Education Savings Plan is a special account for your child's post-secondary education — university, college, or trade school. You put money in, it grows tax-sheltered inside the account, and when your child uses it for school, the growth and grants are taxed in their hands (students usually pay little or no tax).
One important note: unlike an RRSP, your contributions are not tax-deductible. You don't get a tax break for putting money in. The real reward is what the government adds on top.
2. The 20% top-up: free money most parents leave on the table
Here's the part that matters. Through the Canada Education Savings Grant (CESG), the federal government adds 20% to what you contribute — on the first $2,500 per year, per child.
You contribute $2,500 in a year
The government adds $500
Your child's account grows by $3,000
That's $500 a year of free money. If you do this from birth, the grants alone can add up to $7,200 per child over their lifetime. The only deadline that matters: contributions count by December 31 each calendar year. Miss the year, miss that year's grant room (though you can catch up — see below).
3. The limits you need to know
- $2,500/year is the sweet spot. That's the amount that captures the full $500 grant.
- $50,000 lifetime is the total contribution limit per child, across all RESPs in their name. Go over it and there's a penalty tax, so keep an eye on the total.
- Started late? You can catch up. If you missed a year, you can contribute up to $5,000 in a year and collect $1,000 in grants (this year's plus one missed year).
- Grants stop at 17. CESG eligibility ends in the calendar year your child turns 17, so the early years count the most.
4. If money is tight, there's still help
Lower-income families may qualify for the Canada Learning Bond: up to $2,000 per child with no contribution required. You just need an RESP open in your child's name. Thousands of eligible families never claim it because nobody told them. Now you know.
5. "What if my kid doesn't go to school?"
This is the question that stops a lot of parents, so let's answer it plainly.
- The grants go back to the government. Fair enough — they were for education.
- Your contributions come back to you, tax-free. That was always your money.
- The growth doesn't vanish. It can usually be transferred into your RRSP instead of being taxed as income (conditions apply).
In other words: the downside of opening an RESP your child never uses is far smaller than most people think. The downside of never opening one is leaving up to $7,200 of government money unclaimed.
6. The part most parents miss: protecting the plan
An RESP is a plan for your money. But here's the uncomfortable question: who keeps funding it if you can't?
If an illness or injury stops your income — or worse — the RESP contributions stop too, and the grants stop with them. That's why education planning and protection planning belong in the same conversation. Term life insurance and disability coverage don't just protect your family; they protect the plan itself — the RESP, the mortgage payments, the everyday life your kids know.
You don't need to figure out the right amounts alone. That's literally what a planning conversation is for.