An RESP is the closest thing to free money the Canadian government offers a parent. You put money in, Ottawa adds 20% on top, and it grows tax-sheltered until your child starts college or university.
Almost every family I meet knows that much. What most do not know is how much they have already missed, and how much of it they can still catch up on.
How the grant actually works
The Canada Education Savings Grant (CESG) pays 20% on the first $2,500 you contribute each year — up to $500 per child per year, and $7,200 over the child’s lifetime.
The part people miss: unused grant room carries forward. If you did not contribute last year, you can contribute $5,000 this year and collect $1,000 in grant instead of $500. You can only catch up one year at a time, which is why starting matters more than the amount.
Families under certain income thresholds also receive Additional CESG — an extra 10% or 20% on the first $500 contributed each year. And families who qualify receive the Canada Learning Bond, up to $2,000 per child, with no contribution required at all. I have opened RESPs for families who qualified for the Learning Bond and did not know it existed. That is $2,000 sitting unclaimed.
There is no annual contribution limit, but there is a lifetime limit of $50,000 per child. Contributions are not tax deductible. Growth is tax-sheltered, and when the money comes out for school it is taxed in the student’s hands — which usually means barely taxed at all.
If you came to Canada in the last few years, read this part
This is where I see the most money lost, and it is specific to families in Brampton.
Your child needs a Social Insurance Number before the RESP can be opened. Not after — before. If the SIN application is still in progress, the account cannot be set up and the grant clock is not running.
Grant room only starts accumulating once the child is a resident of Canada. A child who arrived at age eight does not get eight years of back-dated grant room. This is the single most common misunderstanding I encounter, and it is usually discovered too late.
Because grant room can only be caught up one year at a time, a late start is permanent. A family that opens an RESP when the child is fourteen can realistically collect around $2,000 of the $7,200 available. Opening it at seven instead of ten is worth roughly $1,500 in grant money — for doing exactly the same thing, three years sooner.
If you are unsure where your child stands, bring me their SIN and their date of landing and I will work out exactly how much grant room is available and how fast you can collect it.
One plan, or one per child
A family plan covers siblings related to you by blood or adoption. If one child does not pursue post-secondary education, the earnings can be used by another. For most families with more than one child this is the better structure, and the one I recommend.
An individual plan covers one beneficiary and can be opened for anyone, including a niece, nephew or grandchild.
What if my child does not go to school
The question every parent asks, and a fair one.
Your own contributions come back to you, tax-free. They were always yours. Grant money — the CESG and any Canada Learning Bond — goes back to the government. The investment growth can be transferred into your RRSP, up to $50,000, if you have contribution room and the plan meets the conditions; otherwise it comes to you as income with an additional tax charge on top.
An RESP can stay open for up to 35 years, so there is no need to rush the decision. “Not going to school” at eighteen often becomes a trade programme at twenty-four — and apprenticeships, colleges and many programmes abroad all qualify.
Why I use a segregated fund RESP
I write RESPs through iA Financial Group as an insurance contract rather than a bank account or a mutual fund.
That means the plan carries maturity and death benefit guarantees under the contract, and it names a beneficiary — so if something happens to you, the plan passes directly rather than being frozen in your estate while your child is applying to school. For a plan whose entire purpose is a specific event on a specific date, that mattering-when-it-matters is the point.
It also means you are not dealing with a call centre. You will deal with the same person in ten years when it is time to take the money out, which is the part most families find confusing.
Fees on segregated fund contracts are generally higher than a comparable mutual fund, because of those guarantees. I will show you the number and let you decide.
Common questions
How much should I put in each month?
About $208 a month gets you the full $2,500 annual contribution and the full $500 grant. If that is too much, put in what you can — grant is paid on every dollar up to the limit, so $50 a month still earns $120 a year in grant.
Can grandparents open an RESP?
Yes. Anyone can open one for a child, and grandparents often do. Just make sure the family is not accidentally exceeding the $50,000 lifetime limit across two plans.
Can I open one for a child born outside Canada?
The child needs to be a Canadian resident with a SIN. Where they were born does not matter; where they live does.
What if I already have an RESP at my bank?
Bring me the statement. Sometimes a transfer makes sense and sometimes it does not — there can be exit fees, and group scholarship plans in particular can have restrictive terms. I will tell you honestly either way.
When should I open it?
The week the SIN arrives. Every year of delay is roughly $500 of grant you cannot fully recover.
For the full range of savings and investment options, including the FHSA and RDSP, start at the main page.
Bring your child’s SIN and date of landing and I will calculate exactly how much grant money is available to you. Book a 15-minute conversation.