RESP corpus at year 18.
RESP at age 18
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Your contributions
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CESG total
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Free money toward a child’s education
A Registered Education Savings Plan turns saving for university into a partnership with Ottawa. Contributions are not tax deductible, but the government adds the Canada Education Savings Grant on top, and everything inside the plan grows tax sheltered until it is withdrawn for school. This calculator takes your annual contribution, the child’s current age, and an expected return, then projects the plan’s value at age 18 along with the grant earned and your own contributions.
The 20 percent grant and its ceilings
The basic CESG pays 20 percent on the first $2,500 you contribute each year, which is $500 of free grant annually. The lifetime grant ceiling is $7,200 per child, reached after roughly $36,000 of contributions. There is also a separate lifetime contribution limit of $50,000 per child, though contributions above the $2,500 grant threshold no longer attract the match. This is why the tool caps the annual contribution at $2,500: that is the precise amount that maximizes the grant without overshooting. Lower income families can earn an extra 10 or 20 percent on the first $500 through the Additional CESG, and may also qualify for the Canada Learning Bond.
Starting at age 3, contributing the full $2,500
Suppose you open the plan when your child turns 3 and contribute $2,500 every year until age 18, earning 6 percent. That is 15 years of contributions, each drawing the $500 grant.
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You put in $37,500, the government added the full $7,200 grant, and tax sheltered compounding lifted the total to roughly $74,018. Note that the grant hits its $7,200 lifetime cap in this scenario, so contributing for more than about 14.4 years at $2,500 stops adding new grant even though your own contributions keep compounding.
Catching up if you started late
Opening a plan when your child is already 8 or 10 does not forfeit the missed grant. The CESG carries forward, and you can claim grant on up to $5,000 of contributions in a single year, which captures $1,000 of grant, double the normal annual maximum. So a parent who fell behind can contribute $5,000 a year to draw down accumulated grant room until they catch up to the $7,200 ceiling. The hard deadline is the end of the calendar year the child turns 17, and the last two years carry extra eligibility conditions, so a teenager’s plan needs prompt attention rather than a leisurely catch up.
Who this is for and the withdrawal split
This is for parents and grandparents planning education savings, especially anyone deciding how much to contribute and when to start. The insight that saves families the most tax sits at the withdrawal stage. An RESP pays out in two buckets: your original contributions come back tax free to anyone, while the grant and growth are taxed in the student’s hands as Educational Assistance Payments. Students usually have little other income, so that portion is often taxed at or near zero. The smart move is to draw the grant and growth first while the child is enrolled and low income, preserving the tax free contribution return for flexibility. Drain the taxable portion before the student graduates into a higher earning job.
What happens to the RESP if my child does not go to school?
The grant must be returned to the government, but your contributions always come back to you tax free. The investment growth can be moved into your RRSP if you have contribution room, up to $50,000, or withdrawn as an Accumulated Income Payment that is taxed at your marginal rate plus a 20 percent penalty. Keeping the plan open is often wise, because a child may return to eligible studies later, including many trade and part time programs that qualify.
Is a family RESP better than an individual plan?
For households with more than one child, usually yes. A family plan lets you share contributions, grant, and growth among siblings, so if one child wins a scholarship or skips post secondary, the others can use the accumulated income. Each child still has their own $7,200 grant ceiling, but the flexibility to reallocate the earnings across beneficiaries is a real advantage over locking funds into separate individual plans.