How Does an RESP Work?

RESP Basics

RESP stands for Registered Education Savings Plan. It’s an education savings account that grows tax-free until your child is ready for post-secondary education, whether that’s university, college, or a vocational institute.


Money put towards an RESP is not tax-deductible like an RRSP contribution. However, there are benefits:

  • Money grows tax deferred until your child needs it.
  • Students may pay little or no tax on the money when it’s withdrawn to pay for education.
  • The federal government may kick in free money, by way of Canada Education Savings Grants and/or Bonds
  • An RESP can be opened for one child or several children at once.
  • Anyone can contribute to a child’s RESP, not just the parents.

There are limits

While there's no longer an annual limit for contributions to RESPs, lifetime contributions are limited to $50,000 per beneficiary. And many people choose to contribute monthly or annually, rather than in one lump-sum, because it is affordable and it may maximize the free Canada Education Savings Grants (CESGs) the RESP receives.

To find out more about the benefits of an RESP, take a look at our RESP section. For more information on the CESG, visit the Government of Canada website.


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