RESP basics for teens and parents: how the grant, the account, and the withdrawal fit together
Most RESP explainers are written for parents of toddlers. This one is written for the two people sitting at the kitchen table when the beneficiary is already a teenager: the parent who opened the plan years ago, and the teen whose name is on it and who will be taxed on part of what comes out. A Registered Education Savings Plan is not one pot of money. It is three different kinds of money sharing one account, and almost every RESP surprise — a grant that has to be repaid, a withdrawal taxed to the wrong person, a deadline missed at 17 — comes from treating the three as one. Every figure below was checked against the Government of Canada's own RESP and Canada Education Savings Grant pages in October 2026.
Three pots of money in one account
The person who opens the plan is the subscriber — anyone can be one, including parents, guardians, grandparents, other relatives, and friends. The person the money is for is the beneficiary. The financial organization holding the plan is the promoter. Inside the account, the money itself comes in three kinds. Contributions are what the subscriber puts in. Benefits are government money paid into the plan, mainly the Canada Education Savings Grant (CESG) and, for eligible lower-income families, the Canada Learning Bond (CLB). Accumulated income is the investment growth everything in the plan earns. Money in the plan grows tax-free while it stays there, and contributions get no tax deduction going in — the tax treatment that matters happens at withdrawal, and it differs for each pot, which is the whole point of the table in the withdrawal section below.
The grant: how the CESG actually pays
The CESG is a matching grant, and matching means contributions come first: no contribution, no grant. Employment and Social Development Canada pays a basic CESG of 20% of annual contributions, up to $500 per beneficiary per year — the full $500 arrives when $2,500 is contributed in a year. The lifetime CESG limit is $7,200 per child, and grants are available on contributions made up to the end of the calendar year the beneficiary turns 17. Two features matter to families of teens. First, unused grant room carries forward: a family that started late can receive up to $1,000 of basic CESG in a year by contributing $5,000, catching up one missed year at a time. Second, there is a hard late-start condition most explainers never mention: for a beneficiary who is 16 or 17, the CESG is only payable if at least $2,000 was contributed (and not withdrawn) before the end of the year the child turned 15, or if at least $100 a year was contributed in at least four years before that same deadline. A plan opened from zero at 16 does not qualify. Families with lower or middle incomes may also receive an additional CESG on the first $500 contributed each year — an extra 20% (up to $100) at the lowest income band, or 10% (up to $50) in the middle band, based on adjusted family net income. Separately, the Canada Learning Bond needs no contributions at all: opening the plan is what makes an eligible child eligible for it, which is why "open it early, even empty" is sound mechanics rather than a sales line.
The limits that matter
There is no annual contribution limit, but there is a lifetime contribution limit of $50,000 per beneficiary — across every RESP naming that child, combined. Government benefits and investment growth do not count toward that $50,000; only contributions do. Going over has a price: a tax penalty of 1% per month on the subscriber's share of the over-contribution until it is withdrawn. That is why subscribers who are not in the same household — a parent and a grandparent with separate plans, for example — have to tell each other what they contribute. The plans also have long clocks: contributions can be made for up to 31 years after the plan opens, and the money can be used for up to 35 years, so a teen who takes gap years has not stranded anything. One more coordination rule surprises families: when a child is named on more than one RESP, the CESG is paid to the plan that received the earliest contribution, on a first-come, first-served basis — the grant does not split itself across promoters unless the contributions land on the same date.
Who should open it: a decision framework
Decide in this order. First, who will actually contribute steadily? The subscriber controls the plan and makes the contributions that attract the grant, so the natural default is a parent who will contribute year after year. Second, how many children should the plan cover? A family plan can hold several beneficiaries, who must be related to the subscriber by blood or adoption — a child can be added to a family plan if they are under 21 when added — and that structure is what later lets an unused CESG be shared with a sibling. An individual plan covers one beneficiary and is the flexible shape when different adults are saving for different children. Third, will a grandparent open a second plan? That is allowed and common, but it triggers both coordination rules above: the shared $50,000 lifetime limit and the earliest-contribution CESG rule. Two plans with no conversation between them is how over-contributions happen. Fourth, the teen's own role. A beneficiary can even be their own subscriber as an adult opening a plan for themselves — relevant to an 18- or 19-year-old apprentice whose family never opened one, though the CESG's age-17 endpoint and the 16/17 conditions mean the grant ship has usually sailed by then; what remains is tax-sheltered growth on their own contributions. Finally, a caution about group plans, the pooled type some promoters sell: they can require contributions at set times under a contract, which is a genuinely different commitment from the contribute-when-you-can structure above — read the contract before signing anything.
Money out: EAP versus contributions
| Educational Assistance Payment (EAP) | Withdrawal of contributions | Accumulated Income Payment (AIP) | |
|---|---|---|---|
| What it is made of | Government benefits (CESG, CLB) plus accumulated income | The subscriber's own contributions | Accumulated income only, when it is not used for education |
| Who receives it | The beneficiary (student) | The subscriber, who may pass it to the beneficiary | Usually the subscriber |
| Who is taxed | The student — EAPs are the beneficiary's income | Nobody — contributions come back tax-free | The subscriber, at their regular rate plus an additional 20% (12% in Quebec) |
| Conditions | Beneficiary enrolled in an eligible program; subscriber requests it from the promoter with proof of enrolment | Requested by the subscriber; withdrawing contributions in non-education circumstances can trigger CESG repayment | Applies when the income will not be used for education; moving up to $50,000 of earnings to an RRSP can be an alternative |
The EAP is the withdrawal most families will actually use, so its mechanics deserve a paragraph. The beneficiary must be enrolled in an eligible program — full-time in Canada means at least 3 consecutive weeks with at least 10 hours of instruction or work per week; part-time means at least 3 consecutive weeks and at least 12 hours a month — and the promoter will ask for official proof of enrolment before paying. EAP money can pay for tuition, books, tools, transportation, and rent. There is a starting cap: for full-time students, EAPs are limited to $8,000 during the first 13 consecutive weeks of enrolment (for part-time, $4,000 per 13-week period), with no limit after that unless a 12-month break from qualifying studies reinstates the original limit. And the tax design works in the student's favour: because the EAP is taxed in the student's hands and students typically have little other income, the beneficiary may pay little to no tax on it — the opposite of what would happen if the growth were taxed to the parent.
If post-secondary does not happen
Nothing in that outcome is a catastrophe, and the plan does not have to be closed in a panic — the options include keeping it open for future studies, replacing the beneficiary, transferring money to other registered plans, or closing it. If it is closed unused: contributions return to the subscriber untaxed, because they were never deducted. The CESG can be shared with a sibling who has CESG room available; otherwise it is returned to the Government of Canada, and an unused CLB is always returned. The accumulated income, if paid out to the subscriber as an AIP, is taxed at the subscriber's regular rate plus the additional 20% (12% in Quebec) — which is why the RRSP transfer route, moving up to $50,000 of RESP earnings into the subscriber's RRSP where the rules allow it, is worth a conversation with the promoter before anything is closed. The teen-facing translation: a parent saving in an RESP is not betting the money on one child's one path, but the grant portion genuinely is education-only money, and everyone at the table should know that from the start.
FAQ
Can a teen open an RESP for themselves? The official definitions allow the beneficiary to be the same person as the subscriber when an adult opens a plan for themselves. The practical limit is the grant: CESG eligibility ends with the year the beneficiary turns 17, and the 16/17 contribution conditions look back to before age 15, so a self-opened plan at 18 is about sheltered growth, not grants.
Do grandparents' contributions and parents' contributions stack? For the $50,000 lifetime contribution limit, yes — every plan naming the child shares one limit, and the 1%-per-month penalty applies to the excess. For the grant, CESG is paid to the plan with the earliest contribution. Coordinate the totals at least once a year.
Is the money taxed when it comes out for school? Split answer, by pot: contributions come back tax-free; the EAP — grants plus growth — is taxed as the student's income, which is often little or no tax in practice because students usually have low incomes.
What if the plan was never opened and the teen is already 16? Then the CESG conditions decide everything: the grant is only available at 16 or 17 if the $2,000-before-15 or $100-in-four-years tests were already met. If they were not, an RESP can still hold contributions, but no new grant room can be created after the fact.
General information only — this article is not financial advice. RESP rules and grant figures are from the Government of Canada pages cited in this site's research notes, checked October 2026. For decisions about a specific plan, talk to the plan's promoter or a qualified professional.