RESPs Explained: A Simple Guide for Ontario Families

September often puts education front and centre for families. While Ottawa parents are packing lunches, organizing school schedules, and settling into a new academic year, it can also be a good opportunity to think further ahead.

Post-secondary education can represent a significant expense, and starting to save early can give families more time to prepare. A Registered Education Savings Plan, commonly known as an RESP, is one option designed specifically to help Canadians save for a child's education.

Understanding how RESPs work, including contributions, government grants, and available investment options, can make it easier to decide how education savings fit into your family's broader financial plan.

What Is an RESP?

A Registered Education Savings Plan is a registered account designed to help save for a beneficiary's post-secondary education.

The person who opens and contributes to the RESP is called the subscriber. The beneficiary is the person who will eventually use eligible funds from the plan for post-secondary education.

Parents aren't the only people who can open an RESP. Grandparents, relatives, and others can also establish a plan for a beneficiary.

RESP funds can help support eligible post-secondary studies, including:

• University.
• College.
• Trade school.
• Apprenticeship programs.
• CEGEP.

There are individual and family RESP plans, and the appropriate structure will depend on who you're saving for and your family's circumstances.

Why Start Saving Early?

One of the biggest advantages of beginning early is time.

Starting an RESP when a child is young provides more years for contributions and potential investment growth. It can also make saving for education feel more manageable by spreading contributions over a longer period.

You don't necessarily need to make large contributions all at once. Depending on your financial situation, regular contributions can allow education savings to become part of your household's longer-term budget.

For Ottawa families balancing everyday expenses with mortgages, retirement savings, and other financial priorities, starting with an amount that works within your budget can be more practical than waiting for the "perfect" time to begin.

Understanding Government Grants and Contribution Limits

One of the features that makes RESPs particularly valuable is access to government education savings incentives.

Through the Canada Education Savings Grant, or CESG, the federal government provides a basic grant equal to 20% of eligible annual RESP contributions, up to $500 per beneficiary each year. Generally, contributing $2,500 during the year can therefore attract the maximum $500 basic CESG for that year.

The lifetime CESG maximum is $7,200 per beneficiary. Families with eligible low or middle incomes may also qualify for additional CESG amounts.

There is no annual RESP contribution limit under current rules, but there is a lifetime contribution limit of $50,000 per beneficiary across all RESPs established for that beneficiary.

Unused basic CESG room can also carry forward, which means families who weren't able to maximize contributions in earlier years may have opportunities to receive additional grant amounts later, subject to the applicable rules.

The Government of Canada provides detailed information on RESP contributions and education savings incentives, including current CESG amounts and eligibility requirements.

Common RESP Questions Parents Ask

Do RESP contributions have to be made every year?

No. Families can adjust their contributions according to their financial circumstances. However, contributions are required to receive the CESG, and starting earlier provides more opportunities to access available grants and build education savings over time.

Can grandparents open an RESP?

Yes. Parents, grandparents, relatives, and others can open an RESP and name an eligible beneficiary.  An important note is that if more than one RESP account exists for the same beneficiary(ies) then any limits apply across all accounts.

What happens if my child doesn't attend university?

RESPs aren't limited to university. Eligible post-secondary education can include colleges, trade schools, CEGEPs, and apprenticeship programs.

If the beneficiary doesn't pursue qualifying post-secondary education, different rules apply to contributions, government grants, and accumulated investment earnings. Discussing those rules with a Scrivens broker can help you understand your options before making changes to the plan.

Is there only one type of RESP?

No. Individual plans are established for one beneficiary, while family plans can include more than one eligible beneficiary. The right option depends on your family and education savings goals.

How much should I contribute?

There isn't one contribution amount that's right for every family. Your budget, child's age, available CESG room, and other financial priorities can all influence how much makes sense.

How an RESP Fits Into Your Financial Plan

Saving for education is important, but it usually isn't a family's only financial goal.

Parents may simultaneously be paying down a mortgage, building emergency savings, contributing to an RRSP or TFSA, managing insurance needs, and preparing for retirement. An RESP should therefore be considered as part of the bigger financial picture rather than in isolation.

Scrivens offers Registered Education Savings Plans in Ontario and can help families understand how RESP contributions and investment options may fit alongside their other financial priorities.

The right approach may also change over time. As income, expenses, family circumstances, and education goals evolve, periodically reviewing the plan can help ensure it continues to reflect your needs.

Start Planning for Their Future Today

Post-secondary education may still be years away, but starting earlier can give your family the advantages of more time to save,  access to available government incentives, and incorporate education costs into a broader financial plan.

Connect with a Scrivens broker to discuss your education savings goals and explore the investment options that best fit your family's future.

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