Understanding RESPs: A Comprehensive Guide to Maximizing Your Child’s Education Savings

Published On: March 15, 2024Categories: Insights

In today’s competitive world, education plays a pivotal role in shaping a child’s future. As parents, we strive to provide the best opportunities for our children, and adequately saving for their education is crucial. The Registered Education Savings Plan (RESP) is a valuable tool available to Canadian families. According to Statistics Canada, the cost of post-secondary education continues to rise with an average Canadian undergraduate tuition fee for 2023/2024 of $7,076.

What is an RESP?

An RESP is a tax-advantaged investment vehicle designed to help save for children’s post-secondary education. Administered by the Canadian government, an RESP account allows contributions to grow tax-free until withdrawal, at which point they are taxed depending on the student’s income bracket. Since students often have little or no income, they can usually withdraw the money tax-free. Eligible education expenses can include tuition, books, transportation, and rent.

Key Benefits of RESPs:

Government Grants:

One of the most attractive features of RESPs is the availability of additional government saving programs, such as the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB). If the child is eligible, these benefits will be received in the RESP to help with the cost of the child’s education, to a lifetime maximum of $7,200 and $2,000, respectively.

RESP Investment Flexibility:

RESPs offer flexibility in terms of investment options, allowing you to choose from a range of investment vehicles such as mutual funds, stocks, bonds, Guaranteed Investment Certificates (GICs) and private real estate investment trusts (REITs). The flexibility in RESP investment options enables you to tailor your strategy according to your risk tolerance and financial goals.


If the intended beneficiary does not pursue post-secondary education, RESPs can be transferred to another RESP for an eligible beneficiary, ensuring that the funds are still utilized for educational purposes. Other options include transferring the RESP to another registered plan such as a Registered Retirement Savings Plan, a Registered Disability Savings Plan or closing, repaying received government grants and withdrawing any personal contributions from the RESP. Each situation has separate tax implications, which is why it is always important to discuss details with a financial advisor.

RESP Withdrawal Rules:

Once the beneficiary finishes high school and is enrolled as a part- or full-time student in a qualifying post-secondary educational institution, such as a trade school, college, university, or apprenticeship program, you can begin removing funds from the RESP account. Payments made to the beneficiary are called Education Assistance Payments (EAPs) and consist of accumulated investment earnings and potential government benefits.

Tips for Maximizing Your RESP:

Start Early:

Time is your greatest asset when it comes to saving for your child’s education. By starting early and making regular contributions, you can harness the power of compounding interest to grow your savings further.

Diversify Your Investments:

While RESPs offer flexibility in terms of investment options, it’s essential to diversify your investments to mitigate risk and optimize returns. Private REITs such as those offered by Equiton, are registered fund eligible.

RESP Contributions:

Unlike other registered accounts, RESPs do not have an annual contribution limit, but rather have a lifetime maximum RESP contribution limit per beneficiary of $50,000.

RESPs represent a powerful tool for Canadian families to save for their children’s education while benefiting from tax advantages, government grants and additional investment opportunities. By understanding how RESPs work and implementing an effective saving and RESP investment strategy, you can take significant strides towards securing your child’s future and providing them with access to quality education.

Equiton’s investment specialists can assist you in learning more about the benefits of investing in private real estate and how best to incorporate private real estate investments into your RESPs to enhance your child’s financial future.