The best RESPs in Canada for 2023

With numerous RESP providers available, it can be overwhelming to evaluate each one individually. It’s important to find an RESP provider that aligns with your specific needs, preferences, and long-term financial goals. Explore our RESP provider below and take the first steps towards your child's education savings. 

Introducing Embark and their flagship RESP, the Embark Student Plan.

This RESP is designed specifically for your child’s age and evolving needs. This plan focuses on growth when the child is young and gradually becomes more conservative as your child grows older, preserving their savings. Here are some key features of the Embark Student Plan: 

• User-friendly account setup and management - the online account creation process is simple, intuitive, and can be completed within minutes
• Diverse investment options - every investor has unique risk profiles and investment preferences. Embark offers various investment portfolios tailored to suit different needs, whether you prefer low-risk options or have a more aggressive investment strategy
• Competitive fees and incentives - the transparent fee structure ensures that you know exactly what you are paying for. Their fees are competitive with the market ensuring that you can maximize your investment returns
• Exceptional flexibility - the Embark Student plan is a family plan, giving you and your family additional flexibility. If one of your children decides not to pursue post-secondary education, you have the option to transfer the RESP to another eligible beneficiary within your family

Our guide to the best RESPs in Canada 

What is an RESP? 

An RESP is a tax shelter, similar to a TFSA or RRSP, designed specifically to help save for a child’s post-secondary education. It’s important to note that an RESP is not limited to being a traditional bank account. It provides the flexibility to hold various types of investments, including savings, GICs, mutual funds, stocks, bonds, and more.

How to choose an RESP? 

When choosing an RESP in Canada, several factors should be considered to make an informed decision. Here are some considerations to keep in mind:

• Fees and expenses: compare the fee structures of various RESP providers. Consider account maintenance fees, investment management fees, and any other charges that may be associated with the plan
• Investment options: Understand and evaluate the investment options offered by the RESP provider. For example, it is a group RESP or do you get to select the investment vehicles, such as mutual funds, GICS, funds, etc. The availability of investment options should align with your risk tolerance and long-term financial goals. 
• Grant maximization: Ensure that the RESP provider can administer grants (such as the CESG,  CLB, BCTESG, and QESI) to maximize your savings. 
• Flexibility: Ensure the RESP offers flexibility in terms of contributions and withdrawals. Look for accounts that allow you to adjust the contribution amounts based on your financial circumstances and transfer the funds to another eligible beneficiary within the family without losing government grants
• Customer service: Assess the RESPs’ customer service quality, including responsiveness, availability, and support channels. It is nice to have your questions answered as you need them and any additional support needed to assist you throughout the RESP journey. 
• Educational Assistance and Resources: Many RESP providers offer additional education assistance and resources, such as calculators, tools, and information to help you plan for your child’s post-secondary education. These resources can help you make informed decisions and optimize your RESP investments.

RESP pros and cons

When it comes to saving for your child's education, a Registered Education Savings Plan (RESP) is a popular choice among Canadian families. RESPs offer several benefits, but it is essential to understand both the advantages and disadvantages to make an informed decision about your educational saving strategy. 

What are the benefits of an RESP?

1. Government grants: Government grants are a significant benefit of an RESP, offering potential grants of over $7,200 per child depending on your province of residence. Programs like the Canadian Education Savings Grant (CESG), the Canada Learning Bond (CLB), the British Columbia Training and Education Savings Grant (BCTESG), and the Quebec Education Savings Incentive (QESI) provide additional funds based on your contributions, helping your savings grow faster and easing the financial burden of educational expenses. 
2. Tax advantages: The investment earnings within the plan grow tax-free until your child beings withdrawing the funds for post-secondary education. This tax-sheltered growth can lead to substantial savings over time.  
3. Usage flexibility: RESPs provide flexibility in how you can use your savings. You can allocate the funds towards tuition fees, books, accommodation, and other eligible education expenses.  This ensures that your child's needs are met throughout their education.

What are the disadvantages of an RESP?

1. Contribution limits: RESPs have a lifetime contribution limit of $50,000 per beneficiary. While this provides a significant savings opportunity, exceeding this limit may result in tax penalties or restrictions.
2. Withdrawal restrictions: Withdrawals from an RESP must be for post-secondary education. If your child decides not to pursue higher education, there may be certain limitations or tax implications when accessing the funds. There are various options available, such as transferring the funds to a sibling; however, it is important to note that this may have an impact on government grants and investment earnings.
3. Market volatility: Like any investment, RESP returns are subject to market fluctuations and your return cannot be guaranteed. It is crucial to consider your risk tolerance and choose investment options in line with your tolerance.  

How to make RESP withdrawals?

In order to make withdrawals from an RESP in Canada, your child must be enrolled in a qualifying post-secondary education program. RESP withdrawals can be categorized as Post-Secondary Education (PSE) and Educational Assistance Payments (EAP) withdrawals. 

• PSE withdrawals involve returning the original contributions made to the RESP. These are non-taxable as they were made with after-tax dollars.
• EAP withdrawals consist of the investment earning and government grants accumulated within the RESP. There are some rules to keep in mind when making an EAP withdrawal:
  • • Beneficiaries may only withdraw up to $5,000 in their first 13 weeks of full-time schooling or $2,500 in their first 13 weeks of part-time schooling
    • After that, they can withdraw as much as they want as long as they continue to be enrolled in a qualifying program

It is crucial to stay informed about the rules and regulations surrounding RESP withdrawals to ensure compliance and maximize the benefits of your RESP savings. Talk to your provider prior to withdrawal to ensure that you and the beneficiary understand all considerations. 

RESP Contribution Limit

In Canada, there is a lifetime contribution limit of $50,000 per child for all RESPs in their name. While there is no yearly limit on how much you can contribute, you will need to be mindful of the overall amount. To give you an idea, contributing approximately $2,777 per year or $231 per month for 18 years would keep you within that limit. 

Should you exceed the lifetime maximum, a 1% per month tax is applied to the excess contributions, payable by the subscriber (usually the parent). For example, for every $1,000 over the limit, you would incur an annual tax of $120. 

The good news is that the lifetime limit maximum only applies to contributions and does not include grant money or investment income earned within the RESP. This means that you can take full advantage of government grants and investment growth without worrying about exceeding this limit.  

Do you have to go to university or college to use an RESP?

It is not mandatory for a child to enroll in a post-secondary program to use the funds from an RESP. Even if your child decides not to pursue university or college after graduating from high school, you have options to make the most of the RESP savings. 

Firstly, you can maintain the RESP account and continue to earn investment income until the plan has been opened for a maximum of 35 years. This means that the funds can remain in the RESP, potentially growing further, allowing for future educational opportunities. 

Additionally, if you have multiple children, you have the flexibility to transfer the RESP savings to another eligible child within the family. This ensures that the funds are still utilized for educational purposes. 

Alternatively, if your child does not go to university or college and you have no eligible beneficiaries within the family, you have the option to transfer the funds to your own RRSP (Registered Retirement Savings Plan) under specific conditions. If you have available contribution room in your RRSP, you are eligible to transfer up to $50,000 from your RESP to your RRSP without incurring any penalties. However, certain criteria must be met including that the RESP must have been open for at least ten years and the beneficiaries of the RESP must be at least 21 years old.