Information about Registered Education Savings Plans (RESPs)
Who can open an RESP
Anyone can open an RESP account for a child—parents, guardians, grandparents, other relatives or friends.
While you can open a plan for a child, you can also name yourself or another adult as the beneficiary.
An RESP allows adults to earn interest on their RESP tax-free.
RESPs and bank accounts
You can open an RESP without having a bank account.
Period that an RESP can stay open
You can make contributions into an RESP until 31 years after you first opened it. After that time, however, you can transfer savings from other RESPs into a single plan. You would then have until the end of the 35th year after the plan was first opened to use the funds before the RESP expires (unless otherwise specified in the terms for your plan).
What happens to savings in an RESP when it closes/expires
Any savings that remain in your RESP when it closes will be handled as follows:
- money received from either the Canada Education Savings Grant (CESG) or the Canada Learning Bond (CLB) will be returned to the Government of Canada; and
- any personal savings in the account will be returned to the person who opened the plan.
The interest earned on both the personal savings as well as any government grants or bonds will be returned to you if all of the following apply:
- all children named in the plan are at least 21 years old and are not eligible for an Educational Assistance Payment;
- the subscriber is a Canadian resident; and
- the RESP was opened at least 10 years ago.
In this case, the money withdrawn is called an Accumulated Income Payment. When withdrawn, the money will be taxed at your regular income tax rate, plus an additional 20 percent. You may also transfer it into your Registered Retirement Savings Plan (RRSP) or your spouse’s RRSP.
Ask your RESP provider for more details and for explanations on any conditions or penalties that may apply to your RESP should you decide to close the account.
For more information about Accumulated Income Payments, visit the Canada Revenue Agency website.
When an beneficiary does not continue their education after high school
If the child chooses not to continue their education after high school, you can wait a while to see if they change their mind. RESP accounts can stay open for up to 36 years. If you are sure the beneficiary will not be using the money in the future, you can transfer the money from one RESP to another.
Yearly and lifetime RESP contribution limits
From 1998 (the first year the program started) to 2006, inclusive:
- annual contribution limit: $4,000;
- lifetime contribution limit: $42,000 (including any contributions made prior to 1998).
From 2007 to present:
- no annual contribution limit;
- lifetime contribution limit: $50,000 (including all contributions made prior to 1998).
While there are currently no annual contribution limits, you can receive the Canada Education Savings Grant (CESG) only on the first $2,500 in contributions per year, or up to the first $5,000 in contributions, if sufficient carry forward room exists. Any contributions over and above these amounts will not receive any CESG for the current year or any subsequent years. All contributions exceeding $50,000 limit will not attract any grant even if the maximum $7,200 of grant is not reached.
Ask your RESP provider if your plan allows for transfers. Also, ask them to explain any conditions or penalties that may apply if you over-contribute to the account.
Contributions
Some types of RESPs have no minimum deposit requirements, while others do.
Frequency of contributions
Every RESP is different.
- some types require specific monthly contributions;
- others let you put money into your RESP account whenever you want.
The sooner you start to save, the sooner you will be earning interest, and the more your money will grow.
Even savings of $5 a week can quickly add up, especially when the Government of Canada adds money to your savings. Consult these questions for RESP providers to see what else an RESP provider could tell you.
CESG grant room (carry forward)
As of 1998, grant room (unused basic CESG amounts) accumulates until the end of the year in which the child turns 17 even if he or she is not a beneficiary of an RESP. Unused basic CESG amounts for the current year are carried forward for possible use in future years, provided the beneficiary remains eligible.
Summary of limits for education savings
| Period | Contribution required for basic CESG (maximum annual limit) | Annual maximum CESG |
|---|---|---|
| 1998 to 2006 | $2,000 ($4,000 with carry forward room) | $800 (20% of $4,000) |
| 2007 or later | $2,500 ($5,000 with carry forward room) | $1,000 (20% of $5,000) |
| Net family income of primary caregiver (2016 levels) | Maximum amount of Additional CESG |
|---|---|
| $45,282 or less | $100 (20% of the first $500 contributed) |
| More than $45,282, but not more than $90,563 | $50 (10% of the first $500 contributed) |
| More than $90,563 | $0 |
| Time period | Description | Amount | |
|---|---|---|---|
| RESP Contribution Limits | 1998 to 2006 | N/A | $4,000 |
| 2007 or later | N/A | No annual limit | |
| Basic CESG | 1998 to 2006 | Annual amount added to grant room | $400 |
| Basic CESG annual limit | $800 | ||
| 2007 or later | Annual amount added to grant room | $500 | |
| Basic CESG annual limit | $1,000 | ||
| Additional CESG | 2005 or later | Yearly maximum Additional CESG (10% or 20% on the first $500 contributed) | + $50 or + $100 |
| Total CESG (Basic + Additional) | 2005 to 2006 | Yearly maximum payable with carry forward | $900 |
| 2007 or later | Yearly maximum payable with carry forward | $1,100 |
Note: Unused Additional Canada Education Savings Grant (A-CESG) amounts cannot be carried forward to future years.
Over-contributions
An over-contribution occurs when the total contributions made to a beneficiary in one or more RESP(s) exceed the lifetime limit of $50,000.
When an over-contribution occurs, you will be required to pay tax in the amount of one percent per month on your share of the over-contribution until it is withdrawn.
Under normal circumstances, a withdrawal of contributions will require a repayment of the CESG, except when:
- you withdraw contributions to eliminate an over-contribution; and
- the total over-contribution is not more than $4,000 at the time of withdrawal; or
- the RESP beneficiary is eligible for an Educational Assistance Payment.
If the total over-contribution is more than $4,000 at the time of withdrawal, the CESG is repayable on the entire amount withdrawn. If this happens, the grant room is not restored by the repaid amount of CESG.
To determine if the lifetime contribution limit has been exceeded, the Canada Revenue Agency takes into account all contributions made for the beneficiary, even if they have been withdrawn.
For more information on over-contributions as well as tax penalties, visit the Canada Revenue Agency website.
Number of RESPs you can have
There is no limit on the number of plans from different institutions one individual can have in his or her name, but there is a lifetime contribution limit of $50,000 per beneficiary. This limit includes all contributions made in all RESPs combined.
CESG payments are made to a single plan on a first-come, first-served basis. For example, if you contribute the entire $2,500 through one RESP provider on January 15, and later put in a subsequent $2,500 through a different provider on February 15, the CESG will be deposited into the first plan you contributed to. When contributions are made on the same date the amounts are split in half between two plans, each plan receives one half of the CESG.
If you contribute through monthly instalments, the CESG is paid into each plan until either the maximum grant that can be paid in a year, or the lifetime contribution limit, is reached.
Tracking RESP money contributions
Family plan contributions
If you have a family plan with two or more children, contributions must be tracked for each child named in the plan. You can make more than one contribution at a time, and the amounts do not have to be the same for each child.
Group plan contributions
When you open a group plan, you agree to make contributions into the group RESP at set times for the duration of the RESP contract.
The RESP provider will credit the money you put into the group RESP to an account in your name. Any government grants or bonds received by the beneficiary (child) will be put into a separate account that is in the beneficiary’s name.
The interest earned on your savings can be shared within the group plan; however, the interest earned on government grants or bonds cannot be shared and goes directly to the child named in the RESP.
Naming a replacement beneficiary
You may change the beneficiary named on an individual, family or group RESP.
Ask your provider how your contributions will be affected if you switch beneficiaries. (Before opening an RESP, check with your provider to find out about the terms and conditions of the plan.)
As with opening any RESP, the new beneficiary’s Social Insurance Number (SIN) must be provided.
Adding another child to an RESP family plan
If you wish to add another child to an existing RESP family plan, the child must be related to you by blood or adoption, and he or she must:
- be under 21 years old at the time you add him or her to the plan; or
- have been a beneficiary of another family RESP immediately before being added to this one.
As with any RESP, you must provide the new beneficiary’s SIN to the RESP provider.
If the Canada Education Savings Grant, Canada Learning Bond or British Columbia Training and Education Savings Grant (BCTESG) has already been paid into the RESP, you can add a brother or sister of the existing beneficiary to the plan without penalty.
While the Saskatchewan Advantage Grant for Education Savings (SAGES) can only be paid into a sibling-only plan, a cousin can be added to the plan without having to repay the SAGES already in the RESP.
If you add a beneficiary who is not a brother or sister of the beneficiaries already named on the plan, you will need to repay the grants or bonds to the Government of Canada.
How RESPs are taxed
Child who continues education after high school
- Your money grows tax-free while it is in your RESP.
- You do not get a tax deduction for the money you put into an RESP.
- The money that your investment earns while it is in the RESP will not be taxed until money is taken out to pay for your child's education.
- Money paid out of the RESP as an Educational Assistance Payment is taxed in the hands of the student. Since many students have little or no other income, they can usually withdraw the money tax-free.
- The money that you have put in the RESP is returned to you, tax-free.
For more information, please call the Canada Revenue Agency at 1-800-959-8281 or visit the Educational Assistance Payments section of the Canada Revenue Agency's website.
Child who decides not to continue education after high school
- You will not be taxed on the amount you contributed to the RESP, but you will have to pay taxes on the money that you earned in your plan as interest. This money is called "accumulated income." It will be taxed at your regular income tax level, plus an additional 20 percent.
- The money that you have put into the RESP is returned to you.
- The CESG can be shared with a brother or sister if they have grant room available—otherwise, the grant must be returned to the Government of Canada.
- When you close your RESP, you will have to pay tax on the earnings in the RESP. (Although there will be earnings on the CESG, the grant must be returned to the Government of Canada.) You may be able to reduce the taxes you have to pay by transferring your accumulated income to either your or your spouse's Registered Retirement Savings Plan (RRSP). For more information, see the Accumulated Income Payments section of the Canada Revenue Agency's (CRA) website.
- Talk to your RESP provider to find out about any conditions that may apply to the plan if your child does not continue his or her education after high school.
For more information, please call the Canada Revenue Agency at 1-800-959-8281 or visit the CRA website.
Roles and responsibilities
Canada Revenue Agency (CRA)
- administers and applies the RESP rules provided under the Income Tax Act;
- defines the types of RESPs;
- registers the plans;
- provides the Canada Education Savings Program with the income-related information for primary caregivers so that eligibility for the Canada Learning Bond and the Additional Canada Education Savings Grant can be determined.
Employment and Social Development Canada (ESDC)
- administers the regulations under the Canada Education Savings Act, the legislation that governs the Canada Education Savings Grant and the Canada Learning Bond;
- validates the Social Insurance Numbers of beneficiaries;
- processes the Canada Education Savings Grant, the Additional Canada Education Savings Grant, the Canada Learning Bond and provincial grant transactions;
- determines eligibility, calculates and pays (through the RESP provider) the Canada Education Savings Grant, Additional Canada Education Savings Grant, the Canada Learning Bond and designated provincial program administered by Employment and Social Development Canada
- maintains the Canada Education Savings Program system;
- conducts compliance reviews;
- assists in administering provincial education savings programs, such as the Alberta Centennial Education Savings Plan Grant, the Saskatchewan Advantage Grant for Education Savings and the British Columbia Training and Education Savings Grant.
The subscriber
Initiates the process:
- selects a Registered Education Savings Plan and names an eligible beneficiary;
- provides Social Insurance Numbers and certifies that eligibility conditions have been met;
- requests the Canada Education Savings Grant (basic and Additional), the Canada Learning Bond and/or provincial grants and completes application forms;
- directs Educational Assistance Payments to an eligible beneficiary;
- informs the RESP provider of any change to a beneficiary’s status.
The primary caregiver
Provides authorization:
- consents to family income testing to determine beneficiary eligibility for Additional Canada Education Savings Grant and for the Canada Learning Bond;
- authorizes and designates the RESP where the Additional Canada Education Savings Grant and Canada Learning Bond are to be deposited;
- provides their Social Insurance Number or Business Number (if an agency).
The RESP provider (promoter)
- offers RESPs to the public (e.g. banks, mutual fund companies, scholarship foundations, trust companies);
- informs beneficiaries or their custodial parents of the existence of the RESP;
- asks the Canada Revenue Agency to register the plans on behalf of the subscribers;
- applies to Employment and Social Development Canada for the Canada Education Savings Grant, the Canada Learning Bond and provincial grants on behalf of the subscribers;
- receives and deposits the Canada Education Savings Grant, the Canada Learning Bond and provincial grant into the RESP account;
- informs subscribers if the Canada Education Savings Grant, Canada Learning Bond and/or provincial grants was paid (or not);
- maintains and submits monthly records of RESP transactions to Employment and Social Development Canada;
- confirms beneficiary eligibility;
- makes Educational Assistance Payments to an eligible beneficiary;
- provides the beneficiary with a breakdown of totals whenever Educational Assistance Payments are made;
- repays the Canada Education Savings Grant, the Canada Learning Bond and/or provincial grants, if required;
- administers RESPs in accordance with the terms and conditions of their agreement with the Canada Education Savings Program.
The beneficiary
- is named on an RESP by the subscriber ;
- receives Educational Assistance Payments once they are enrolled in a qualifying post-secondary educational program;
- must repay any Canada Education Savings Grant payments in excess of $7,200.
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