RESP — Registered Education Savings Plan
If you have kids, the RESP is the highest-ROI account on the priority list. The federal government matches 20% on the first $2,500 contributed annually = up to $500/yr free per child, lifetime cap $7,200. Free money compounding tax-deferred for 18+ years.
The 2026 numbers
| Item | 2026 value |
|---|---|
| Lifetime contribution limit per child | $50,000 |
| Annual contribution limit | No annual cap, but CESG match is capped per year |
| CESG (Canada Education Savings Grant) | 20% match on first $2,500 contributed annually = up to $500/yr free, lifetime cap $7,200 per child |
| Additional CESG (lower-income families) | Extra 10-20% on first $500 contributed (up to $100/yr extra) |
| CLB (Canada Learning Bond) | Up to $2,000 per child for low-income families (no contribution required) |
| CESG age-out | Beneficiary must be under 18 |
| Catch-up rule | Can contribute one prior year of missed CESG per current year — so $5,000/yr captures $1,000 of CESG (current + prior year catch-up) |
| Withdrawal — Educational Assistance Payment (EAP) | Income to the student, not the parent — usually low/zero tax bracket |
| Withdrawal — Post-Secondary Education (PSE) | Refund of contributions, tax-free to the contributor |
| If beneficiary doesn't pursue post-secondary | Contributions returned to subscriber tax-free; CESG/CLB returned to government; growth (AIP) taxable + 20% penalty (or transferable to subscriber's RRSP up to $50K of room) |
| Account lifetime | 35 years (most plan types) |
What most content gets wrong
Most articles tell parents "contribute $2,500/yr to get $500 CESG and you're done." The catch-up rule (one prior year per current year, $5K/yr captures both) lets a late-starting parent recover lost CESG from earlier years — important for parents who didn't open the RESP until the child was 5+.
The $50K lifetime contribution decision
The lifetime cap is $50K of contributions per child, but the CESG match caps at $7,200 (i.e. $36,000 of contributions earns the full match). Above $36K of contributions, you're using the RESP for the tax-deferred growth shelter only — no more grant. That's still useful, but at the lower marginal value than the first $36K.
Practical decision rule
- Contribute $2,500/yr per child to capture the full CESG match. This is the easy default.
- If you're behind on contributions (catch-up applies), contribute $5,000/yr until you've caught up. Don't miss free CESG.
- Above $36K of cumulative contributions, decide: keep contributing for tax-deferred growth (max $50K), OR redirect savings to the higher-priority accounts (TFSA/FHSA) for that year.
If you're a salaried employee
Standard play: open RESP at Wealthsimple, Questrade, or your big bank. Contribute $208/mo per child ($2,500/yr) to capture the full annual CESG. If you're behind, do $416/mo per child ($5,000/yr) to use the catch-up rule.
Hold the same all-in-one ETF as your TFSA/RRSP — XEQT or XGRO depending on time horizon. As the child approaches 16-17, gradually shift toward XBAL or XCNS to de-risk before the funds are needed.
If you're an incorporated operator
What's specific to you: the RESP isn't a corporate account — contributions come from your personal cash. So the "what salary do I need to fund this?" calc matters. To contribute $2,500/yr per child, you need ~$3,500-4,000/yr of post-tax personal cash per child (assuming AB 28% marginal effective rate).
If you have multiple children, factor it into the salary-vs-dividend decision. Salary increases your personal cashflow available for RESP contributions but costs you ~12% in CPP (combined employer + employee shares). For most operators, paying yourself enough salary to fully fund RESPs + max TFSAs + a baseline RRSP (the "fill the personal accounts first" play) is the right ordering before retaining cash inside the corp.
FAQ
Family RESP vs Individual RESP?
Family plan: one RESP, multiple beneficiaries (siblings). If one child doesn't go to post-secondary, the others can use the funds. Individual plan: one beneficiary only. Default to Family RESP if you have or might have more than one kid.
Group RESPs (Heritage, USC, etc.) — should I use one?
Generally no. The fees are high, the rules are restrictive, and the benefit (pooled risk) is limited. A self-directed RESP at Wealthsimple/Questrade with low-cost ETFs almost always beats them.
What if my kid gets a scholarship?
Scholarship doesn't affect the RESP — they can still take EAP/PSE withdrawals. Some plans even let scholarship recipients pull more from the RESP for living expenses.
What if my kid doesn't go to post-secondary?
Wait until they're 21+ — the rules tighten. Contributions return to you tax-free. CESG/CLB returns to the government. Growth (AIP) becomes taxable income to you + 20% penalty, OR you can transfer up to $50,000 to your RRSP if you have the room.