What Is an RESP and How Does It Work in Canada?
As a parent, one of the most overwhelming ventures is saving for a child’s education. You’re not alone; many parents consider building an education fund but aren't sure where to start. If you live in Canada, the right account can make a huge difference.
This is where a registered education savings plan (RESP) comes into play. Before diving in, you must understand how it works, what government incentives are available, and how contributions and withdrawals are handled. This updated September 2026 guide discusses all of that.
What Is an RESP?
A Registered Education Savings Plan (RESP) is a special tax-advantaged account backed by the Canadian government. Its purpose is to help families save for a child's post-secondary education. Subscribers, typically parents, can contribute up to $50,000 per child in each RESP.
How an RESP helps: Money invested in an RESP grows tax-deferred until it is withdrawn for education. Funds can be used for universities, colleges, trade schools, and apprenticeship programs.
Tips for using an RESP:
Start early
Aim for $2,500 a year
Use a family plan
Monitor the limits
How Does an RESP Work in Canada?
A study by the Financial Consumer Agency of Canada found that 43% of Canadian parents have an RESP for their children. An RESP brings together three key parts to build school savings. These include your deposits, government boosts, and investment growth.
It starts with the setup where the subscriber, usually the parent, opens an RESP for a child, called the beneficiary. The subscriber then deposits after-tax money into the plan. There is a lifetime maximum limit of $50,000 per child, but no strict annual limit. Also, the Canada Education Savings Grant (CESG) offers an extra 20% of contributions up to $2,500 per year.
When the student attends college or university, funds are disbursed as an Educational Assistance Payment (EAP). These include government grants and investment growth, which are taxed at the student's lower income rate.
Mistakes to avoid when using an RESP in Canada:
Contributing too late
Over-contributing
Withdrawing money incorrectly
Expected outcome: Your child receives a pool of money to cover tuition, books, rent, and other school-related costs. You also collect up to $7,200 in matching grants per child over the life of the account.
Where to Open an RESP
Several major Canadian banks, credit unions, online brokerages, and group plan dealers offer registered education savings plans (RESPs). You’ll need your social insurance number plus basic personal identification to create one. Here are some organizations to help with this:
Knowledge First Financial (Embark Student Corp)
RESP basics: A lifetime maximum of $50,000 per beneficiary with no annual limits.
Canada Education Savings Grant (CESG): The federal government offers an additional 20% of the first $2,500 contributed per child each year. This grant goes up to $500 per year.
Canada Learning Bond (CLB) for lower-income families: The government deposits $500 in the first eligible year. There is an extra $100 for each additional year up to age 15, for a total of up to $2,000.
Group vs. individual vs. family RESP plans: Individual plans cover a single named beneficiary, while a group RESP is a pooled scholarship trust in which participants' funds are combined. A family RESP covers multiple related children.
Enrolment fees/sales charges: The company does not charge any upfront enrolment fees or sales charges on its modern RESP.
Investment options and risk profile: Options range from cash and savings to GICs, mutual funds, and target-date/glide-path portfolios. These automatically adjust risk as the child approaches college age.
Withdrawal rules: Original contributions can be withdrawn tax-free by the subscriber since they were made with after-tax dollars.
What happens if a child doesn't pursue post-secondary education: For a family plan, siblings can use the accumulated earnings. Also, you can transfer up to $50,000 of investment growth into your own Registered Retirement Savings Plan.
Provincial grants: Additional regional incentives include the British Columbia Training and Education Savings Grant and the Quebec Education Savings Incentive.
Pricing/fee transparency and comparison: This platform charges an all-inclusive annual management fee to handle account administration and investment management.
Use cases: Parents or guardians saving over five to 18 years to maximize government matching grants for a child's college, university, or trade school education.
Alternatives: Informal trust accounts, standard high-interest savings accounts, or Tax-Free Savings Accounts.
Embark, formerly known as Knowledge First Financial, is a Canadian provider that helps families open and manage Registered Education Savings Plans (RESPs). While 622,961 beneficiaries withdrew funds from RESPs in 2025, this company currently manages over $6.4 billion in assets. In 2018, the company acquired Heritage Education Funds, another Canadian RESP provider.
Pros
Flexible family plans
Funds cover colleges, universities, and trade schools
Cons
Group plans carry high front-end fees
Canadian Scholarship Trust
RESP basics: A lifetime maximum of $50,000 per beneficiary; no annual contribution limit. Also, contributions are made with after-tax dollars, but investment growth is tax-free until withdrawn.
Canada Education Savings Grant (CESG): The federal government matches 20% of contributions on the first $2,500 contributed per child per year.
Canada Learning Bond (CLB) for lower-income families: Includes $500 initially upon opening the RESP, plus $100 for each year the family qualifies.
Group vs. individual vs. family RESP plans: Individual and family plans offer flexible savings options for single or multiple related children. On the other hand, group plans use a rigid, pooled structure where your contributions are invested alongside other families
Enrolment fees/sales charges: CST charges a one-time, upfront sales charge of $200 per unit for its CST Advantage Plan and $50 for its Individual and Family Savings.
Investment options and risk profile: Group plans are conservative, with a heavy emphasis on fixed income and capital preservation as the beneficiary nears college age. Individual and family plans offer access to professionally managed mutual funds and external portfolio managers.
Withdrawal rules: Your original contributions can be withdrawn tax-free at any time, while government grants and investment earnings are paid to the student upon enrollment.
What happens if a child doesn't pursue post-secondary education: You can transfer the beneficiary to another eligible sibling/child. Also, government grants must be returned to the government, and accumulated earnings withdrawn as cash are subject to regular income tax.
Provincial grants: Certain provinces offer additional incentives that deposit extra funds into the RESP. These include the Québec Education Savings Incentive or the BC Training and Education Savings Grant.
Pricing/fee transparency and comparison: CST Advantage group plan management fee is around 0.59%, while Individual/Family savings plans range from 1.09% to 1.14%.
Use cases: Parents or guardians who require a rigid, contractual savings schedule to force regular monthly deposits. Also, for those looking to maximize the CESG and CLB baseline funds.
Alternatives: Self-directed RESPs, In-Trust accounts, and indirect savings.
The Canadian Scholarship Trust is a non-profit organization that helps Canadian families save for post-secondary education. They sponsor RESPs to enable families to prepare for college or university according to their Crunchbase profile. The foundation also awards scholarships and financial aid to Canadian students, especially given that 71% of parents save for their children's postsecondary education.
Pros
Structured options for savings
Full access to federal grants
Cons
Early cancellation causes severe financial losses
RBC RESP, TD RESP, Scotiabank RESP, CIBC RESP
RESP basics: Lifetime maximum of $50,000 per beneficiary. While there are no annual limits, plans can stay open for up to 35 years.
Canada Education Savings Grant (CESG): The federal government matches 20% of the first $2,500 contributed per child each year.
Canada Learning Bond (CLB) for lower-income families: The CLB provides $500 in the first eligible year. There is an extra $100 for each additional qualifying year up to age 15, for a total of up to $2,000.
Group vs. individual vs. family RESP plans: These banks support group, individual, and family RESP plans.
Enrolment fees/sales charges: These banks charge no opening or enrolment fees for standard self-directed or branch-managed retail plans. Group plans, however, feature high and non-refundable up-front sales charges
Investment options and risk profile: Ranging from low-risk high-interest savings accounts (HISA) and GICs to higher-risk mutual funds, ETFs, and equities.
Withdrawal rules: Withdrawals for post-secondary schooling are taxed at the student's lower tax rate, based on earnings and grants. Your original contributions can be withdrawn tax-free.
What happens if a child doesn't pursue post-secondary education: The RESP can be reassigned, withdrawn, or rolled over
Provincial grants: BCTESG provides a one-time $1,200 grant for eligible children turning six. Additional incentives, such as the Quebec Education Savings Incentive (QESI), provide tax credits for plan contributions.
Pricing/fee transparency and comparison: These big banks charge no administration fees for holding standard cash, GICs, or mutual fund RESPs.
Use cases: Parent/grandparent savings and people looking to maximize free money.
Alternatives: Informal trust accounts, high-yield savings accounts, and self-directed RESP.
All major Canadian banks, including RBC, TD, Scotiabank, and CIBC, offer Registered Education Savings Plans (RESPs). They typically impose no minimum balance requirements and no annual administration fees. Since banking services held 28.6% of all RESP assets in Canada in 2025, these banks are a major part of the RESP market.
Pros
Zero account fees
Safety options
Cons
Requires manual rebalancing
Wealthsimple
RESP basics: You can contribute up to $50,000 per beneficiary, with no annual contribution limit. Contributions are made with after-tax dollars, but investment growth grows tax-free until withdrawn for education.
Canada Education Savings Grant (CESG): The federal government matches 20% of the first $2,500 contributed per eligible child per year, up to a maximum of $500/year.
Canada Learning Bond (CLB) for lower-income families: Provides up to $2,000 for eligible children from lower-income households. It starts at $500 in the first year plus $100 annually until age 15.
Group vs. individual vs. family RESP plans: Wealthsimple offers individual RESPs for a single child and family RESPs for multiple related children who can share funds. Group RESPs are only sold by specialized scholarship dealers.
Enrolment fees/sales charges: Wealthsimple charges $0 for account opening and enrolment, though standard management fees apply to managed portfolios and underlying exchange-traded funds.
Investment options and risk profile: For an RESP, Wealthsimple provides automated managed investing alongside commission-free trading, featuring standard robo-advisor risk levels.
Withdrawal rules: Withdrawals used for school consist of government grants and investment growth, taxed at the student's lower income tax rate. However, original contributions can be withdrawn tax-free.
What happens if a child doesn't pursue post-secondary education: If in a family plan, funds can go to other siblings. You can transfer up to $50,000 of investment growth into your own Registered Retirement Savings Plan.
Provincial grants: Wealthsimple supports QESI, which adds a 10% match (up to $250/year) for Québec residents
Pricing/fee transparency and comparison: Offers commission-free self-directed trading alongside managed portfolios with flat 0.4% to 0.5% management fees. This fee drops to 0% for families qualifying for the Canada Learning Bond (CLB).
Use cases: For parents and grandparents saving early for a child's education. Also, for low-income families seeking benefits through the Canada Learning Bond.
Alternatives: Group scholarship plans, traditional banks, and credit unions.
Wealthsimple is a Canadian financial technology company and online brokerage that offers commission-free stock trading, automated investing, and everyday banking services. Since 62% of Canadian post-secondary students reported needing financial help, this company offers RESPs for saving for a child’s post-secondary education. These plans come with automated tax-advantaged growth and government matching grants.
Pros
Zero enrolment fees
Automated application for CLB
Cons
The self-directed tier lacks automated rebalancing
Comparing RESP Providers
Although most RESP providers offer a similar service, they still cater to different groups. When choosing one, always pay attention to its pricing structure, risk profile, and investment options. Here is how they compare against one another:
RESP Provider
Key Feature
Best For
Limitation
Knowledge First Financial (Embark Student Corp)
Flexible family plans and multiple investment options
Families saving for college, university, or trade school
Group plans may have high front-end fees
Canadian Scholarship Trust
Structured savings plans and access to federal grants
Families seeking disciplined, regular savings
Early cancellation can cause financial losses
RBC RESP, TD RESP, Scotiabank RESP, CIBC RESP
Broad investment choices and no standard account fees
Parents/grandparents seeking flexibility and government grants
Self-directed plans require manual rebalancing
Wealthsimple
Automated investing and no enrolment fees
Parents/grandparents seeking simple, automated investing
Self-directed plans lack automated rebalancing
Conclusion
You now know how an RESP works in Canada, including government grants, contribution limits, investment options, and withdrawal rules. Before choosing a provider, consider fees, investment options, plan flexibility, grant eligibility, and how well the RESP aligns with your goals.
Next Steps
Compare RESP providers based on your savings goals and budget
Review fees, contribution limits, and withdrawal rules
Check your eligibility for CESG, CLB, and provincial grants
Choose a plan that fits your risk tolerance and timeline
FAQ
Can an RESP be used for trade school?
RESP funds can support eligible post-secondary programs, including universities, colleges, and trade schools. They also support qualifying apprenticeship programs.
Can you have more than one RESP for a child?
A child can be named a beneficiary on multiple RESPs. However, the combined contributions cannot exceed the $50,000 lifetime limit.
What happens to RESP contributions when a child starts school?
Original contributions can generally be withdrawn tax-free. On the other hand, grants and investment earnings are typically paid through Educational Assistance Payments.
