RESP in Ontario: How to Save for Your Child's Education

Post-secondary education in Canada is expensive, and costs in Ontario have consistently risen faster than general inflation. A Registered Education Savings Plan (RESP) is one of the most effective tools available to Ontario families who want to get ahead of that curve — largely because of the government grants that come attached to it. Understanding how an RESP works, and how to use it strategically, can make a meaningful difference in your child's financial starting point.

Marc Pineault at Pineault Wealth Management in London, Ontario helps families across southwestern Ontario build education savings strategies that align with their broader financial goals. Here's what you need to know about RESPs.

How the RESP Works

An RESP is a registered account that allows your contributions to grow tax-sheltered until your child (the "beneficiary") withdraws the funds for qualifying post-secondary education. At that point, the growth and the government grant portions are taxed in the student's hands — typically at a very low rate, since most students have minimal income.

There is no annual contribution limit for an RESP, but there is a lifetime limit of $50,000 per beneficiary. Contributions are not tax-deductible (unlike an RRSP), but the tax-sheltered growth and the government grants more than compensate for that over time.

The account can remain open for up to 35 years, giving families substantial flexibility — particularly useful if a child doesn't pursue post-secondary education right after high school.

The Canada Education Savings Grant (CESG)

The CESG is the central reason the RESP is such a powerful savings vehicle. The federal government contributes 20% on the first $2,500 contributed per year, for a maximum grant of $500 per year and a lifetime maximum of $7,200 per beneficiary.

If you miss contributing in a year, unused CESG room carries forward — but the government will only match grants on a maximum of $5,000 in contributions per year (even if you have more unused room). That means catching up quickly after a missed year is more efficient than trying to bulk-contribute later.

For lower- and modest-income families, there's also the Additional CESG, which provides an extra 10% or 20% on the first $500 contributed per year. The Canada Learning Bond (CLB) is another benefit available to lower-income families — it provides up to $2,000 with no contribution required. Ontario does not currently offer a provincial RESP grant, but the federal programs alone are substantial.

What Happens When Your Child Goes to School

When your child enrolls in a qualifying post-secondary program (college, university, trade school, and many apprenticeships qualify), they can begin receiving Educational Assistance Payments (EAPs). EAPs consist of the investment growth and the government grants — not your original contributions, which you receive back tax-free as a Post-Secondary Education (PSE) withdrawal.

EAPs are taxed as income to the student, but since most students earn little income during school, the effective tax rate is typically very low or even zero. This makes the RESP one of the most tax-efficient vehicles for wealth transfer to the next generation.

There are annual EAP limits during the first 13 weeks of enrollment, so planning the timing of withdrawals matters — particularly in the first year of school.

What If Your Child Doesn't Go to Post-Secondary School?

This is one of the most common questions parents ask. If your child doesn't pursue qualifying education, you have several options:

• Transfer to a sibling's RESP (if they have an existing or new RESP)
• Transfer growth to your own RRSP (if you have available contribution room, up to $50,000 lifetime)
• Close the account — you receive your contributions back tax-free, but the government grants must be repaid, and the growth is taxed as income plus a 20% penalty tax

Opening the RESP early and keeping the account open as long as possible gives your child the most time to decide their path — and gives you the most options if plans change.

Coordinating the RESP with Your Overall Plan

An RESP is most effective when it's part of a coordinated financial plan. Questions like how aggressively to invest inside the RESP (given your child's age and time horizon), whether to use a family or individual plan, and how to balance RESP contributions with RRSP or TFSA priorities all depend on your broader financial picture.

Marc Pineault at Pineault Wealth Management works with families in London, Ontario and across the region to build education savings strategies that make the most of available government programs while staying aligned with retirement and other goals.

Book a consultation with Marc Pineault

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This article is for educational purposes only and does not constitute personalized financial advice. Please consult a qualified financial planner before making any financial decisions.