RESP for a teen: is it too late and how much can you earn?
No, it’s not too late to open a Registered Education Savings Plan (RESP) for a teenager. It’s still possible to get grants until age 17—if you meet certain conditions—and grow those savings to finance your rapidly approaching post-secondary education.
The cost of living is rising, educational paths are diversifying, and many parents are belatedly realizing—time flies!—that an RESP has not yet been opened for their teenager. Well, you still have some time!
Find out what the age limit is, which grants are still available for a teen RESP and how to catch up on unused contribution room. You will also see how much to contribute if you start later, and how an RESP opened in adolescence can really support post-secondary education.
Because when it comes to family finances, better late than never!
What is the age limit for opening an RESP for a teenager?
You can open an RESP for a teenager at any age. In reality, the beneficiary simply has to be under 31 at the time of opening. An RESP can remain in effect for up to 35 years after being opened, so administratively, the door remains open for a long time.
However, opening an RESP and qualifying for grants are not the same thing. You can open an RESP when your teenager is 15, 16 or even 17. However, receiving grants at age 16 or 17 is not automatic. To qualify, certain actions must have been taken before December 31 of the year in which the child turns 15.
Without these conditions, the plan can still be opened, but you will no longer be eligible for grants. It’s sort of like entering a store just before closing time: the door is still open, but there’s less inventory left.
What grants are still available for your teenager?
Even if the RESP is opened when the beneficiary is a teenager, you can probably still take advantage of grants. The Canada Education Savings Grant (CESG) and the Quebec Education Savings Incentive (QESI) are available until December 31 of the year in which the beneficiary turns 17, subject to certain conditions. These grants can add up to thousands of dollars to help finance post-secondary education, and you can catch up on contributions! When you open an RESP late, you can recover unused contribution room, up to a maximum of $5,000 per year.
- CESG: Canada Education Savings Grant
The federal government matches your contributions by 20%, and up to 30% for eligible families.1 This is a direct bonus paid into the RESP. - QESI: Quebec Education Savings Incentive
For each beneficiary residing in Quebec, an annual grant of 10% (up to 20% for eligible families1) is added to contributions. - CLB: Canada Learning Bond
Unlike previous grants, the CLB is only available to beneficiaries from eligible families, and is paid without the need for contributions. An RESP just needs to be opened in the child’s name to obtain up to $2,000 in grants... which can be recovered retroactively, even if the child is 18, 19 or 20 years old.
How do you know if your young person is still eligible for grants?
There are two conditions that must be met to maintain eligibility for grants when your young person turns 16 or 17:
- A minimum of $100 per year must have been contributed for at least four years—always before December 31 of the year your child turns 15.
- A total of at least $2,000 must have been contributed by the end of the year in which they turn 15.
If none of these conditions are met, the grants will no longer be available after age 15. That’s why it’s sometimes essential to open an account quickly.
Do you still have access to grants for your teenager?
To validate your young person’s eligibility for government grants up to the age of 17, let our tool guide you to the right answer.
How much to contribute if you start late?
Even at a later age, starting to save for your teen’s education still opens up a number of possibilities. You can structure your contributions gradually or choose to invest a larger amount if your situation allows. The key is to think carefully about your strategy.
Each year, $2,500 is eligible for grants, plus an additional $2,500 in unused entitlements—for a maximum of $5,000 per year. This catch-up generates $1,5002 in grants, i.e., two times $500 in CESGs and two times $250 in QESIs in Quebec. These amounts will go right into your beneficiary’s Education Assistance Payments (EAPs).
There are many advantages to an RESP, even if you open it in the teen years
There are still many advantages to opening a registered education savings plan during the teen years, from a financial, practical and psychological point of view.
Advantage #1: psychological impact. For young people, it is reassuring to know that money is available for their education, and they can look to their future feeling more freedom. During their studies, this will reduce their financial stress, promote their autonomy and limit their student debt.
Advantage #2: a financial boost from governments. Even over a short period of time, the CESG, QESI and CLB quickly stimulate savings. The returns accumulated on your capital and these grants will also benefit your beneficiary.
Advantage #3: flexibility. Contributions can be recovered tax-free and penalty-free if your teen does not pursue a post-secondary education. Income can also be taxed, under certain conditions.
A good opportunity to educate your young person
Education savings can also be part of a genuine financial education program for your teenager. This is an excellent opportunity to discuss pocket money management and show them how to make sound savings decisions.
The RESP then becomes an excellent educational tool. Your teenager can contribute to their own account and see how their savings grow over time, thanks in part to grants.
FAQs on opening an RESP late
Yes. You can open an RESP after your child turns 15. However, access to grants is no longer possible if certain conditions have not been met by December 31 of the year in which they turn 15.
Yes. Unused contribution room can be recovered through grant catch-up. You can therefore contribute $2,500 per year, with the option of adding a further $2,500 in unused contribution room. Up to $5,000 in contributions per year can generate grants.
See our article Better Late Than Never: Retroactive Grants to Boost your Teen’s RESP! for more information.
If your child does not pursue a post-secondary education, the contributions will be refunded to you, but the grants will have to be returned or transferred to another beneficiary, under certain conditions. Accumulated income can be recovered through an Accumulated Income Payment (AIP) or transferred to an RRSP, also under certain conditions.
Yes. In certain cases, it is possible to change the beneficiary of the RESP, for example, from one sibling to another. However, conditions apply to avoid exceeding the ceilings for grants already paid. Before proceeding, we recommend that you check the tax implications and rules specific to your situation with your education savings advisor or in our prospectus.
1. Based on adjusted family net income. Certain conditions apply. See our prospectus on Kaleido.ca.
Canada Education Savings Grant (CESG) of 20%, and Quebec Education Savings Incentive (QESI) of 10%. Certain conditions apply. See our prospectus on Kaleido.ca.
