A friend of mine, Gary, recently asked me about registered education savings plans (RESPs) and if it’s too late to get started. Gary’s kids are 14 and 12, and while a bit late in the game, there is still time to take advantage of free government money.

What is an RESP?

An RESP stands for Registered Education Savings Program (my article with RESP details) and is a way for parents to invest in their children’s future education. 

Contributions are after-tax (ie. no tax refund), but the account grows tax-free.  While withdrawals are taxable (contributions can be withdrawn tax-free), they are taxed in the student’s hands.  So essentially, providing the student has little income while they are in post-secondary, the withdrawals will face very little tax. 

The icing on the cake is receiving the government matching grants on contributions.  Essentially, the government will top up your contribution by 20% to a maximum of $500 which is called the Canada Education Savings Grant (CESG). 

Doing the math, that means contributing $2,500 into an RESP will result in receiving the maximum $500 CESG from the government per year and a lifetime maximum of $7200/student.

Related: Low-Cost Discount Brokers for RESPs

Catching up on RESPs

As outlined above, opening an RESP when the child is born and contributing $2,500 would result in $500 in free money from the government.  Doing this every year for 15 years would result in maxing out the government freebie ($7,200 max).

Related:  RESP Investment Strategy

But what if you are a bit late getting started?  The bright side is that if you need to catch up, the government will allow you to carry forward your CESG room.  How much?  You can catch up on the previous years CESG in the current year. 

In other words, you can get up to a maximum of $1,000 in CESG in a year.  So essentially, contributing $5,000 will max out the current years and the previous years CESG.

Although RESP accounts have the ability to carry forward contribution room, it’s best not to wait too long as there is a cut off the end of the calendar year that the student turns 17.

Starting Late – Gary’s Situation

Even with kids that are a little older (14 and 12), with the ability to carry forward one year of unused CESG, Gary can still get some CESG money from the government.  How much?

For the 14-year-old, providing that Gary opens an account in 2019, here are the contributions and maximum CESG until age 17.

  Contribution CESG
2019 (age 14) $5,000.00 $1,000.00
2020 (age 15) $5,000.00 $1,000.00
2021 (age 16) $5,000.00 $1,000.00
2022 (age 17) $5,000.00 $1,000.00
Total: $20,000.00 $4,000.00

As you can see from the table, providing that Gary can put away $5k/year for the 14-year-old, he can obtain $4k in free CESG money.  $4k in some provinces is enough for a year’s worth of tuition!  This results in a total portfolio size of $24,000 before investment growth.

For the 12-year-old, providing that Gary opens an account in 2019, here are the contributions and maximum CESG until age 17.

  Contribution CESG
2019 (age 12) $5,000.00 $1,000.00
2020 (age 13) $5,000.00 $1,000.00
2021 (age 14) $5,000.00 $1,000.00
2022 (age 15) $5,000.00 $1,000.00
2023 (age 16) $5,000.00 $1,000.00
2024 (age 17) $5,000.00 $1,000.00
Total: $30,000.00 $6,000.00

Providing that Gary can put away an extra $5k/year for the 12-year-old, he can obtain $6k in free CESG money.  This results in a total portfolio size of $36,000 before investment growth.

Doing a little math by looking at the tables above, it’s apparent that age 10 is the latest age you can start an RESP and still max out the CESG ($7,200).

RESP Investments

Next question is, how should this money be invested?  As the investment timelines are compressed, I would suggest investing in a conservative manner with a healthy amount of fixed income and cash – especially for the 14-year-old.  With only a few years left until the money is needed, it’s no time to gamble on squeezing a few points out of the market.

Here is a detailed article on moving to fixed income and cash prior to RESP withdrawals.

Final Thoughts

Specific to my friend Gary, even with older kids (14 and 12), opening RESPs (or a family RESP) today and contributing $5k for each child (until age 17) would result in a total of $10k in free CESG money

Some of the key takeaways from this post are that providing that the child is age 17 or under, it’s never too late to squeeze out a few free CESG dollars from the government.  For the procrastinators (often me), parents can wait until their children are up to age 10 to open an RESP and still get the $7,200 maximum CESG.  However, if possible, I would suggest opening an RESP as soon as the child is born to take advantage of tax-free compounding returns.  


  1. Susan on September 9, 2019 at 7:59 pm

    We were behind and I hate leaving free money on the table. I discussed with my mother and she agreed to top ours up to the tune of $30,000 with the agreement that we would return the amount to her when we accessed the money. She forfeited her interest on the money but as a very conservative investor she wasn’t making that much in the money and she was happy to contribute that to the boys. Not everyone can afford to do this but if your parents are financially savvy they might agree to help in the way because hey free money.

  2. Susan on September 9, 2019 at 8:00 pm

    Oops forgot to hit follow.

  3. May on September 10, 2019 at 9:04 pm

    My original plan is to max out this every year until I got the full government grant. That is, I will contribute $36K, then that’s it.

    Recently I am thinking maybe I should also top up the RESP accounts with extra $14K. I didn’t see my kids will not go to universities. The $14K will grow tax free and the kids eventually will pay tax but it’s supposed to be a lower tax than my own anyway.

    Would like to know your thoughts on this, FT. Thanks.

    • Susan on September 10, 2019 at 10:35 pm

      I would recommend putting the additional amount above the grant requirements in your TFSA instead of adding to the RESP. Less restrictions to access. Tax free vs deferred tax.

      • May on September 11, 2019 at 2:51 pm

        The reason I wanted to contribute more to RESP is because I maxed out all my registered accounts and still have some to put in my taxable account. I think RESP would be better than taxable.

        I know, I am a big saver. Other option is just spend the extra money on a vacation.

    • FT on September 16, 2019 at 9:50 am

      Hi May, sorry just seeing this. Providing that you have everything else maxed out, another $14k in an RESP may not be a bad idea. That is assuming that they go to a University that’s fairly expensive. Also take into consideration if your children will have part-time work while in school, which will offset the RESP needs.

      • Susan on September 28, 2019 at 12:46 pm

        Once the child goes to university, you can get all the money out if you want. There are a couple of hoops to jump through for the initial withdrawal but once those are met, then you can theoretically collapse the whole thing at once. And the actual school requirements are quite minimal. I don’t have all the rules off the top of my head but I know my oldest qualified with a 3 month trade school program. You can also pull all the principal investment out in one withdrawal and just leave the taxable portion in there if you need the money later or if you have more TFSA room or your kid gets TFSA room. Lots of options. Just have to know and understand the rules.

  4. Spudman on September 21, 2019 at 8:24 am

    Hi all. I have my resps with td e funds. I haven’t tracked my yearly investments. My statements do not show total cesg received. Do I call TD to find that?

    • FT on September 21, 2019 at 7:53 pm

      Spudman, login and view your transactions in the account. You should see the CESG amount deposited into the account. For us, we deposit 2500 in January, and receive the CESG around March time frame.

  5. Calvin W. on January 8, 2020 at 2:31 pm

    Sorry I didn’t quite get the table. If you can only have previous 1 year carried forward, then you can only benefit from that 1 extra year’s grant, which is to contribute 5000 to receive 1000. But going forward you can only receive 500 out of 2500 each year. How can you keep contributing 5000 to receive 1000 in the following years?

    • FT on January 20, 2020 at 12:07 pm

      Hi Calvin, you can keep contributing the 5000 depending on how many years you are behind. If you are only 1 year behind, then yes, you can contribute the $5,000 the following year to catch up, but then back to $2,500 after.

  6. Dennis on August 7, 2020 at 12:12 pm

    My son is 10 years old. We just moved to Canada last year and he just got his own SIN this year when we got our PR status. How many years could catch up?

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