RESP Calculator

The RESP (Registered Education Savings Plan) is one of the best deals the Canadian government offers. The federal Canada Education Savings Grant (CESG) automatically adds 20% to your contributions, up to $500 per year per child. That's $500 of free money, every year, for up to 18 years.

The $2,500/year sweet spot

The 20% match caps at $500/year, which means contributions over $2,500 in a single year don't get matched. Most coaches recommend contributing exactly $2,500/year ($208/month or $96/bi-weekly) to capture the maximum grant without over-contributing.

If you start at birth and contribute $2,500/year for 14.4 years, you'll hit the $36,000 contribution threshold that fully exhausts the $7,200 lifetime CESG. After that, contributions still grow tax-deferred but don't earn new grants.

Catch-up rules

If you missed years, you can carry forward up to $5,000/year in contributions to capture missed grants - meaning you can get up to $1,000/year in CESG if you contribute $5,000. You can only catch up one year's worth of grants per year.

How RESPs are taxed

• Contributions: Made with after-tax money. No deduction (unlike RRSPs).
• Growth + grants: Tax-deferred while inside the RESP.
• Withdrawals: When your child uses the money for school, the grant + growth portion (called EAPs - Educational Assistance Payments) is taxed in the student's name. Most students pay little to no tax.
• Your original contributions: Can be withdrawn tax-free anytime, even by you.

What if your kid doesn't go to school?

Options if your child doesn't pursue post-secondary education:

• Transfer the RESP to another child (sibling) or use it for yourself if you go back to school.
• Roll growth into your RRSP if you have contribution room (up to $50,000 lifetime).
• If neither, you keep your contributions but the grants get returned to the government and growth is taxed at your marginal rate + 20% penalty.

Where to open an RESP

Most low-cost options:

• Wealthsimple Invest - Robo-advisor, easy to set up, captures CESG automatically.
• Questrade - Self-directed, lowest fees if you DIY.
• Bank RESPs - Convenient but high MERs eat returns. Generally avoid.
• Group RESPs (Heritage, etc.) - Restrictive, hidden fees. Avoid.

This calculator is for educational purposes only. CESG rules are accurate as of 2024 but may change. Confirm with the Government of Canada or a tax professional for your specific situation.