Saving for a child’s post-secondary education is one of the smartest financial decisions a family can make. In Canada, a Registered Education Savings Plan (RESP) is the most beneficial way to do it — thanks to government incentives, tax-free growth, and flexible contribution options. But a common question many parents ask is: Who can contribute to an RESP?
In this blog, Punjab Insurance breaks down everything you need to know, including RESP contribution limits, withdrawal rules, and how an RESP calculator can help you plan smarter.
Who Can Contribute to an RESP?
The good news is — almost anyone can contribute to an RESP as long as the plan holder allows it. This includes:
✔️ Parents & Legal Guardians
The most common contributors. They typically open the RESP and manage deposits.
✔️ Grandparents
Grandparents can contribute to help secure the child’s future. Many families use this as a long-term gifting strategy.
✔️ Other Family Members
Aunts, uncles, and siblings can make contributions as permitted by the RESP account holder.
✔️ Friends & Sponsors
Anyone who wants to support the child’s education may contribute, provided they have the plan holder’s approval.
✔️ The Child Beneficiary (in some cases)
If the beneficiary earns income, they may contribute, but only the plan holder controls the account.
Important: Regardless of who contributes, the overall RESP contribution limit applies to the child, not each contributor.
RESP Contribution Limit: How Much Can You Contribute?
RESPs are very flexible, but they do have contribution rules. Here’s what you need to know:
✔️ Lifetime RESP Contribution Limit: $50,000 per child
This is the maximum total that can be contributed from all sources combined.
✔️ No Annual Contribution Limit
Although there is no yearly cap, staying within the $50,000 lifetime limit is essential to avoid penalties.
✔️ Government Grants Add Extra Money
The Canada Education Savings Grant (CESG) adds:
- 20% of annual contributions
- Up to $500 per year
- Lifetime maximum grant of $7,200
Low-income families may also qualify for additional CESG and the Canada Learning Bond (CLB).
RESP Contribution: Why It Matters
Every dollar you contribute grows tax-free inside the RESP. This means:
- More savings for tuition, books, and living expenses
- Enhanced government grants
- A lower tax burden when the child withdraws funds for school
Consistent contributions — even small ones — can create substantial educational savings over time.
RESP Withdrawal Rules: What Happens When It’s Time to Take Money Out?
When the beneficiary starts a qualifying post-secondary program, withdrawals can begin. There are two types of withdrawals:
1. Educational Assistance Payments (EAPs)
These include investment earnings and government grants.
- Taxed in the student’s hands (usually low taxes).
- Can be used for tuition, rent, transportation, supplies, etc.
- First-year withdrawal limit: $8,000 for full-time students and $4,000 for part-time.
2. Post-Secondary Education (PSE) Withdrawals
These are from your original RESP contributions.
- Withdrawals are not taxed because you already paid tax on that money.
- No limit on withdrawal amounts.
If the Child Doesn’t Go to School
Several options exist, such as transferring savings to an RRSP, transferring to another child, or closing the plan with certain conditions.
Use an RESP Calculator to Plan Better
An RESP calculator helps you estimate:
- How much you should contribute monthly
- How much you’ll earn in government grants
- Total projected RESP value
- Estimated education fund at maturity
This tool is invaluable for parents wanting to build a stress-free and realistic savings plan.
Final Thoughts
Understanding who can contribute to an RESP, along with RESP withdrawal rules, contribution limits, and planning tools, is essential for maximizing your child’s education savings. Whether you’re a parent, grandparent, or generous sponsor, contributing to an RESP is one of the best gifts you can offer.
If you need professional guidance, Punjab Insurance is here to help you choose the right RESP plan and optimize your contributions.
