RESP basics: how education savings plans work in Canada

Updated November 2026

A Registered Education Savings Plan (RESP) is a tax-sheltered account for a child's education after high school. You can contribute up to $50,000 per child over their lifetime, the government adds grants, and the growth is taxed only when the student takes it out, usually at a low rate.

$50,000Lifetime contribution limit per child
No annual limitThough grants are paid on only part of each year's contributions
35 yearsTime limit to use the plan

The people in an RESP

Subscriber: The person who opens the plan and contributes, often a parent or grandparent. Contributions are not tax-deductible.
Beneficiary: The child the money is for. A Social Insurance Number is needed for the child to get grants.
Promoter: The bank, credit union, investment firm or other organisation that offers the plan.

Family, individual and group plans

Types of RESP
Type	Beneficiaries	Main points
Family plan	One or more children related to you by blood or adoption: your children, stepchildren, grandchildren or siblings	Money can be shared among the children; useful for siblings. Nieces, nephews and cousins don't count as blood relatives for this purpose.
Individual plan	One child, who doesn't have to be related to you	Anyone can open one, including a family friend or the student as an adult.
Group plan	One child, who doesn't have to be related to you	Your savings are pooled with those of other subscribers and shared among children born the same year. Usually requires regular payments over a set period. Each group plan has its own rules.

The $50,000 lifetime limit

The total that everyone together can contribute for one child, across all RESPs, is $50,000. There is no annual limit, but the Canada Education Savings Grant is paid only on the first $2,500 a year (or $5,000 when catching up). Putting in a large lump sum early can mean more growth but fewer grants; spreading contributions usually collects more grant money. If two people (say, parents and grandparents) each open a plan, they need to coordinate to stay under the limit.

How money comes out

When the child enrols in a qualifying program after high school (university, college, trade school, apprenticeship and other eligible programs), the money in the plan is paid out in two different ways:

Your contributions can be returned tax-free, because you already paid tax on that money.
Educational Assistance Payments (EAPs) are made up of the grants and all the investment growth. They are taxed in the student's hands. Because most students have little other income, much or all of an EAP is often covered by the student's basic personal amount and other credits, so little or no tax is paid.

Example: Over 18 years a family contributes $36,000, receives $7,200 in grants and earns $20,000 of growth. The plan holds $63,200. The $36,000 can come back tax-free. The $27,200 of grants and growth is paid as EAPs over the student's years in school and is reported on the student's tax return.

The 35-year rule

An RESP must generally be closed by the end of the 35th year after it was opened. A plan opened when a child is born therefore has to wind up by about the child's 35th birthday. That leaves room for students who start school later or return as adults.

If the child doesn't go to school

Many children decide later, so there is no rush to close the plan. But if it becomes clear the money won't be used for education, here is what happens:

Contributions come back to the subscriber tax-free.
Grants are returned to the government. The Canada Education Savings Grant must be repaid unless it can be shared with a sibling in a family plan who still has grant room. The Canada Learning Bond is also returned.
Investment growth can be paid to the subscriber as an Accumulated Income Payment (AIP), generally once the plan has existed for at least 9 years and every beneficiary is 21 or older and not eligible for EAPs. An AIP is taxed at your regular rate plus an extra 20% (12% if you live in Quebec).
Transfer to an RRSP: up to $50,000 of the growth can be moved into your RRSP if you have enough unused RRSP room. The amount transferred is not hit by the extra 20% tax.

Another option is naming a different beneficiary, for example a younger sibling. Ask your promoter which options your plan allows before collapsing it.

Example. Dana's plan holds $30,000 of her contributions, $5,000 of grants and $15,000 of growth. Her son decides not to study. She gets her $30,000 back tax-free and the $5,000 of grants goes back to the government. She has $10,000 of RRSP room, so she moves $10,000 of the growth into her RRSP with no extra tax. The other $5,000 is paid as an AIP: taxed at her regular rate plus 20% (an extra $1,000).

Choosing a provider

RESPs are offered by banks, credit unions, investment dealers, mutual fund companies and group plan providers. Before you sign:

Compare more than one promoter.
Ask whether the promoter offers all the grants your child may qualify for, including the Canada Learning Bond and any provincial grant.
Ask about every fee, contribution limit, penalty and payment option, and get the information in writing.
For a group plan, read the plan rules closely: what you must pay and when, what happens if you miss or stop payments (fees may apply), and what happens if the child doesn't go to school or picks a program the plan doesn't recognise.
Have anything you don't understand explained before you sign.

A self-directed or bank RESP gives you flexibility to contribute when you want and choose your own investments. A group plan gives you less control and has stricter rules. If you are not sure, a registered professional can help; see finding an advisor.