This blog's content was taken from episode 251, "Spicy Hot Retirement Takes for Canadians"

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Taking a Look at RESPs

RESP is the abbreviated term for Registered Education Savings Plan. This is an account that you’ll typically open for your children’s education. However, it doesn’t have to be for your own children. For example, it could also be opened for a nephew or grandchild. 

A RESP can also be used towards a wide range of education including apprenticeship programs, CEGEPs, trade schools, colleges, and universities. You can find the full list on the Government of Canada website or by simply clicking here.

There is a lot to know when it comes to RESPs. Here are the main things you need to know. Not all details are included on this list so make sure you also do your own research.

  • You don’t get a tax credit when you contribute to a RESP
  • RESP contributions may be eligible for government grants
    • The Canada Education Savings Grant (CESG) is one that is available to everyone
  • You can contribute a lifetime maximum of $50, 000 to a RESP
  • You can contribute to a RESP for up to 31 years and the plan can remain open for a maximum of 35 years
  • Contributions that you made can be withdrawn tax free and are known as Post-Secondary Education (PSE) withdrawals
  • Withdrawals of funds contributed by the government via grants, investment income (capital gains/dividends) count as taxable income for the child when they are enrolled in a post-secondary program
    • Since the child will have low income there will either be no taxes or very little taken


The CESG is a grant that matches 20% of your contributions up to a total of $500 per year. This means that you would max out the grant if you contribute $2, 500 a year. The lifetime maximum of the grant is $7, 200 per child. This equals to be a little more than 14 years of maxing out the matching.

There are other grants available. Make sure you look into which ones you’re eligible for. For example, the Canada Learning Bond is a grant for lower income families. Some provinces offer grants as well.

The RESP is a great way to save for your child’s education. Slowly maximizing government grants along the way and letting it compound over time.