RESPs in Ontario – Invest in Their Future with Dave Financial Services Inc.
The Registered Education Savings Plan (RESP), introduced by the Canadian government in 1974, provides an easy way for parents, grandparents, and guardians to save for a child’s higher education.
What Is a RESP?
A Registered Education Savings Plan (RESP) is a government-registered investment account designed specifically to help families save for a child’s post-secondary education. It allows investments to grow tax-free, and the government provides incentives like the Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB).
Who Can Invest in a Child’s RESP?
Anyone can open and contribute to a child’s Registered Education Savings Plan (RESP — not just parents). This includes:
- Parents.
- Grandparents.
- Guardians.
- Relatives.
- Family friends.
- Even the child themselves (if they meet the requirements).
All contributors can help grow the RESP, but only the subscriber (the person who opens the plan) manages the account and makes investment decisions. The child (beneficiary) must be a Canadian resident with a valid SIN to receive government grants like the Canada Education Savings Grant (CESG).
Key Benefits of a RESP
1. Canada Education Savings Grant (CESG)
The federal government contributes 20% on the first $2,500 you save each year per child, up to $500 annually and $7,200 lifetime.
2. Tax-Sheltered Growth
Investments in an RESP grow tax-free until the money is withdrawn for school.
3. Additional Grants for Low-Income Families
You may qualify for Canada Learning Bond (CLB) and additional CESG based on family income.
4. Wide Range of Investment Options
Invest in GICs, mutual funds, ETFs, stocks, and more — tailored to your goals and risk tolerance.
5. Anyone Can Contribute
Parents, grandparents, friends, and even the child can contribute.
6. Flexible Withdrawals for School Expenses
Use the funds for tuition, books, transportation, and other eligible education costs.
What Can You Hold in a RESP?
RESPs offer a variety of investment choices to grow your savings over time:
- Mutual Funds.
- ETFs.
- GICs (Guaranteed Investment Certificates).
- Bonds.
- Stocks.
- Segregated Funds.
- Cash.
At Dave Financial Services Inc., we’ll help you build a well-balanced RESP portfolio suited to your risk tolerance and timeline.
Types of RESP Plans
Individual RESP
Ideal if you’re saving for one child. Anyone can open it and contribute.
Family RESP
Designed for multiple children in the same family. Flexible and cost-effective, as grants can be shared if one child doesn’t attend post-secondary school.
Group RESP
Offered by scholarship plan dealers. More rigid rules and fees—less flexibility for contributors. Not recommended for all families.
We'll help you choose the RESP type that best fits your financial situation and family structure.
How Much Can You Contribute?
- Lifetime maximum: $50,000 per child.
- No annual limit, but contributions over $2,500/year won’t earn additional CESG for that year.
- Contributions are not tax-deductible, but the earnings grow tax-free.
RESP Withdrawals: How and when?
RESP withdrawals fall into two categories:
- Educational Assistance Payments (EAPs): These include government grants and investment income, taxed in the student’s hands.
- Return of Contributions (ROC): You can withdraw your original contributions tax-free.
We guide you through withdrawal strategies to minimize taxes and maximize benefits when your child is ready for school.
What If the Child Doesn’t Go to School?
You still have options:
- Transfer up to $50,000 into your RRSP (if you have contribution room).
- Name another beneficiary.
- Withdraw the income as an Accumulated Income Payment (AIP) (subject to tax + penalty).
Our Ontario-based RESP specialists can help you manage RESP funds wisely, even if plans change.
Unused RESP Option
- You can keep the money in the account for at least 35 years or until the end of the time period allowed by your plan. This flexibility allows the child to use the RESP for post-secondary education, even if they decide to pursue it at a later age. In other words, the RESP can remain active for a long time, providing an opportunity to support the child’s education whenever it happens.
- If you have chosen an individual or family RESP, you have the option to replace the beneficiary or use the funds for another child covered under the same plan, subject to certain rules. However, with group RESP plans, the ability to transfer the plan to another beneficiary without incurring fees varies depending on the specific plan. So, you may need to review the terms of your group RESP plan to determine if this is possible.
- It is possible to move funds from an RESP account to a personal Registered Retirement Savings Plan (RRSP), but certain conditions must be met.
Your RESP account must have been open for at least ten years, and all beneficiaries must be at least 21 years old and not pursuing post-secondary education.
your RRSP must have available contribution room, and your RESP plan must allow for such transfers. If these conditions are met, you can transfer funds from your RESP to your RRSP. - Under certain conditions, you may be able to transfer funds from your RESP to the beneficiary’s Registered Disability Savings Plan (RDSP). If the beneficiary has a severe and long-term mental disability that makes it unlikely for them to pursue higher education, then you can transfer the funds. Alternatively, if your RESP has been open for a minimum of 10 years and all beneficiaries have turned 21 and are not pursuing post-secondary education, or if the RESP has reached its maximum lifespan of 35 years, then you can also transfer the funds to the RDSP. However, it is important to note that not all RESP plans allow for transfers to RDSPs, so it is important to check with your plan provider.
- You have an option to completely close the RESP and take back all your contributions without paying any additional tax on it. However, all the contributions received from the government on your RESP must be returned, since the money can only be used to pay for post-secondary education. You still have the option to take home the interest you’ve earned if your RESP has completed 10 years of investment since the time you started, and all the beneficiaries under the plan have turned 21 and are not continuing with their higher education.
RESP vs. TFSA – Which One Should You Choose?
Both are valuable tools for long-term savings in Ontario, but they serve different purposes:
| Feature | RESP | TFSA |
|---|---|---|
| Primary Goal | Education savings | General savings or investment growth |
| Tax Treatment | Contributions not deductible, tax-deferred | Tax-free growth and withdrawals |
| Government Grants | Yes (CESG, CLB) | No |
| Withdrawals | Taxable (EAPs), tax-free (ROC) | Always tax-free |
We’ll help you balance RESP and TFSA use to suit your short- and long-term financial goals.
Why Work with Dave Financial Services Inc.?
Located in Ontario, Dave Financial Services Inc. offers personalized RESP planning with:
- In-depth knowledge of government grant programs.
- Tax-efficient investment strategies.
- Ongoing contribution tracking.
- Withdrawal planning and post-secondary transition support.
- Transparent, unbiased advice tailored to your family.
FAQs – RESP in Ontario
Yes. Multiple RESPs can be opened by different people, but the combined lifetime contribution limit of $50,000 still applies.
RESPs are federal accounts, so you can continue using and contributing to them even if you move out of Ontario or to another province.
You can open a RESP through banks, credit unions, insurance companies, or financial advisors like us at Dave Financial Services Inc. We help you choose the right plan, apply for grants, and invest wisely.
RESP funds can be used for tuition, books, accommodation, transportation, and other eligible expenses for post-secondary education in Canada or abroad.
The CESG is a government grant that matches 20% of your annual contributions, up to $500 per year per child, with a lifetime maximum of $7,200.
You can contribute up to $50,000 per child over the lifetime of the RESP. There is no annual limit, but only the first $2,500 per year qualifies for the full CESG.
Areas We Serve
- RESP in Hamilton.
- RESP in Toronto.
- RESP in Mississauga.
- RESP in Brampton.
- RESP in Scarborough.
- RESP in Markham.
- RESP in Vaughan.
- RESP in Milton, Oakville, Brantford, Kitchener, Waterloo, Cambridge, London, Barrie and beyond.
Whether you’re in Peris-Ontario, Burlington, Ajax, Pickering, or anywhere else in Ontario, we’re here to help you build a smart education savings strategy.
