Registered education savings plan (RESP)

A registered education savings plan (RESP) is a government-created and tax-sheltered account for your child's post-secondary education. An RESP trading account lets you take a more proactive approach to the investment, with a wide range of trading tools and services.

How does an RESP trading account work?

You must start an RESP with an initial sum, which is determined by the financial organization you choose to invest with. You can then build your portfolio with regular contributions and an active investment strategy. The government allows for a lifetime maximum contribution of up to $50,000 per beneficiary (child); however, there is no annual limit.

What can I trade in an RESP?

Diversify your RESP and build a strong portfolio with stocks, options, ETFs, mutual funds, bonds, exempt market products, and gold bullion.

What is a family RESP account?

If you have (or plan to have) multiple beneficiaries, you can open a family RESP account for all your children or beneficiaries and save by buying bigger share lots, rather than multiple lots in different accounts.  It is not simple to just add multiple beneficiaries to a family RESP.  All the beneficiaries need to be blood relatives.  Click here for the HRSDC's definition of a blood relative.

Are there any restrictions on what type of educational program the RESP can be used for?

The types of educational programs the RESP can be used for is based on HRSDC (Human Resources and Skills Development Canada) guidelines. Beneficiaries can withdraw funds for any qualifying educational program at a designated post-secondary institution.

Can I withdraw money from my RESP?

If you need to take money out of your RESP, the withdrawal will be made via capital withdrawal (funds that have been contributed, not grants or income). Grants will need to be paid back to the HRSDC unless it is to correct over-contribution or if the beneficiary qualifies for EAP (Educational Assistance Program). The grant money will only be retracted if the minimum amount corresponding to the grant money is withdrawn as well.  For example, if you contributed an extra $1,000 on top of the amount required to earn the maximum grant money, and then withdraws that $1,000, that withdrawal won't affect the grant money.

What happens if my child doesn't continue on to a post-secondary education?

An RESP account can remain open until the end of the year in which the plan turns 35 so if you wish, you can add another beneficiary to the account and use the RESP account to fund that beneficiary's education. If this is not an option, you can request an accumulated income payment; however, certain criteria must be met for this to occur. An additional beneficiary can only be added if the RESP was originally set up as a Family RESP.

What if I want to close my account early?

If an account is closed early, any grants that have been paid into the account must be returned to the government. Any direct contributions made to the account by the account subscriber can be withdrawn by said subscriber. Any income in the account will be required to be withdrawn via an accumulated income payment. However, certain criteria must be met for this to occur.

Are there any government programs to help with my RESP?

The Canadian government offers two programs to assist you in saving for your child's post-secondary education. The first is the Canadian Education Savings Grant. There are two types: basic CESG and additional CESG.

  • Basic CESG is a grant of 20% of contributions made to a beneficiary until the year they turn 17. There are limits to the grant (annual) and carry forward amounts.
  • Additional CESG is an additional grant from the government to help save for your child's education. This grant is based on the net family income of the child's primary caregiver (the individual who receives the Canada Child Tax Benefit).

The other program is the Canada Learning Bond. No contributions are required to qualify, but there are three other requirements:

  • The child must have been born after December 31, 2003
  • The child must have a valid social insurance number (SIN)
  • The child's individual primary caregiver must receive the National Child Benefit Supplement (NCBS) for at least one month of the benefit year or receive payments under the Children's Special Allowances Act for at least one month of the benefit year.

In addition, the provinces of Alberta and Quebec offer unique grants. Find out more here about what Alberta and Quebec offer.