RESPs: 11 FAQs

More and more Canadians are contributing to registered education savings plans (RESPs) to help save for their kids’ post-secondary education.¹ And many parents have questions about this highly appealing registered plan. Maybe you do too?

Angela Iermieri, Financial Planner² with Desjardins Group, sets the record straight and answers your 11 most frequently asked questions about RESPs.

No, there's no specific dollar amount required to open or maintain an individual (one beneficiary) or family (two or more beneficiaries) plan. However, some RESP investment options, like guaranteed investments (term savings) or mutual funds, may require minimum deposits.

You get to decide how much and how often you contribute. You can set up automatic transfers to the RESP, or you can simply make contributions whenever you have an amount to invest. For both individual and family RESPs, you can adjust your contribution amounts and frequency as you see fit. Just be sure not to exceed the lifetime contribution limit of $50,000 per beneficiary, and to follow the established terms and conditions associated with the type of investment chosen.

There are plenty of investment options to choose from at Desjardins, like Desjardins Funds or guaranteed investments (or term savings)—which protect your capital and interest until maturity—and daily interest accounts (DIAs). When you open an RESP, an advisor will help you choose your investments by determining your investor profile, which is based on your needs, investment horizon and risk tolerance.

As a subscriber, you’ll receive quarterly and annual statements. You can also keep an eye on how much you're saving online, at your convenience. You can see current information about your contributions, government grants added to the RESP and the return on your investment.

Your RESP provider, such as your caisse or credit union, applies for the grants on your behalf. The Canada Education Savings Grant (CESG) is based on your contributions and is deposited monthly into the account. Quebec residents are also eligible for the Québec education savings incentive (QESI), which is deposited yearly. For the Canada Learning Bond (CLB), an initial payment is deposited when the plan is opened. After that, an annual payment is made for each additional year the beneficiary is eligible.

When a subscriber contributes to an RESP, that money is still theirs and can be withdrawn at any time before the plan ends. However, you may have to return the CESG or QESI if the withdrawal is made before the student is enrolled at a post-secondary institution.

Subscribers can contribute to an RESP for up to 31 years from the date the plan is opened, as long as they stay within the contribution limits. However, contributions made after the beneficiary turns 18 are no longer eligible for government grants. The funds must be used by the end of the 35th year after the plan’s opening. So, if the student decides to take a gap year before going or returning to college or university, there’s no need to immediately close the account. For example, if you open a plan in 2025, you can contribute to it until the end of 2056, and the funds must be used by the end of 2060.

To qualify for EAPs from an RESP, students must attend:

• A college, university or other educational institution in Canada that offers post-secondary courses that are eligible for student financial assistance (student loan and bursary programs)
• An educational institution in Canada certified by Employment and Social Development Canada as an institution offering courses to develop or improve a person's skills in an occupation
• A college or other institution outside Canada that offers post-secondary courses, and at which the beneficiary is enrolled in a program that lasts at least 13 consecutive weeks
• A university outside Canada where the beneficiary is enrolled in a program that lasts at least three consecutive weeks.

For more information, see the page: Pay for education using the Registered Education Savings Plans and related benefits - Canada.ca

Yes, but only if they’re enrolled in a program at an eligible educational institution in Canada that lasts at least three consecutive weeks and requires students to spend no less than 12 hours per month on coursework. 

You have several options, including transferring the RESP to a sibling of the beneficiary. Siblings can keep the grants, provided certain rules are followed. If you can’t choose a new beneficiary, the grants will be returned to the government, and your contributions will be returned to you. As the subscriber, you can transfer up to $50,000 of accumulated investment income to your RRSP if you have enough contribution room, or you can withdraw the money. If you decide to withdraw it, you’ll have to include it as part of your taxable income for the year and pay an additional 20% tax.

For more information, see the page: Managing the Registered Education Savings Plan, taxes and transfers - Canada.ca