Yes, you can open both an RESP and a TFSA to save for your child’s education.
Reviewed by Paul Thorne
Securing your child’s, grandchild’s or loved one’s future through education begins with smart goal setting. The Registered Education Savings Plan (RESP) and the Tax-Free Savings Account (TFSA) are both popular saving options for Canadian families. Each has its own unique advantages, but what’s right for your family?
Consider the key features, tax benefits, and ideal uses of these savings vehicles to help guide your decision-making process.
* Throughout this page the term “child” refers to child, grandchild, or a loved one that is a beneficiary of the RESP.
Key differences between an RESP and a TFSA
You contribute to both an RESP and a TFSA with after-tax funds. But, the key differences between an RESP and a TFSA for education savings lie in government support, tax treatment, and usage flexibility.
An RESP is education-specific. It offers government incentives and tax-deferred growth.
A TFSA can be used to save for anything. It provides flexibility with tax-free withdrawals for any purpose.
- Government incentives: RESPs may qualify for the Canada Education Savings Grant (CESG), Canada Learning Bond (CLB), and some provinces provide an additional incentive. TFSAs do not offer government incentives.
- Tax treatment on money invested: RESPs offer tax-deferred growth. TFSAs offer tax-free growth.
- Tax treatment on withdrawals: Tax on RESP withdrawals depend on what you’re withdrawing. You can withdraw contributions tax-free, but investment growth and grant withdrawals are taxable in the beneficiary’s hands. All TFSA withdrawals are tax-free.
- Flexibility: The beneficiary needs to be enrolled in a qualifying education program to make withdrawals from an RESP. You can withdraw from a TFSA for any purpose.
RESP vs TFSA – What’s the difference?
| Feature | RESP | TFSA |
|---|---|---|
| Who can contribute | Parents, grandparents, other family members, and friends can contribute if they are the subscriber to the RESP. | Only the account holder can contribute. |
| Primary use | To pay for education-related expenses like tuition, books, rent, or transportation to school. | Extremely flexible. Funds in a TFSA can be withdrawn at any time for any purpose. |
| Contribution limit | Lifetime limit of $50,000 per beneficiary no matter how many RESPs are opened for that person. For example, if
then, your parents can contribute a maximum of $40,000 to their RESP for Child A (the lifetime limit minus what you contributed or $50,000 - $10,000 = $40,000). |
How much you contribute to your TFSA1 depends on:
Speak with a tax advisor to determine your own TFSA contribution limit. |
| Deadlines | Contributions can be made in the first 31 years of the plan. For example, if you opened an RESP for Child A on June 21, 2020, you can contribute to this RESP until December 31, 2051. |
None. |
| Government grants and incentives | Eligible for the Canada Education Savings Grant (CESG), up to $7,200 per beneficiary. Additional incentives available depending on your province/territory of residence and/or income. | No government contributions, grants or incentives. |
| Plan termination | Generally, you can keep an RESP open for up to 35 years. Some exceptions apply. For example, if you opened an RESP on July 10, 2020, the RESP must be closed by December 31, 2055. |
You can keep your TFSA open for as long as you want during your lifetime. |
| Tax-free withdrawals | Only contributions can be withdrawn tax-free. When you withdraw funds for the beneficiary’s education, the incentives and earnings will be included as income to the beneficiary. However, as a student, they may owe little or no tax. If you make a withdrawal for non-educational purposes: there are duration rules, tax considerations and tax penalties may apply. |
Yes. |
| Using funds for studying outside of Canada | Yes, but only at approved institutions listed by the Canadian government’s list of designated educational institutions If you’re sending money abroad for education: You may have to declare international transfers of large sums of money to the Canadian government. The student may also need to report receiving these funds in their country of study. Not declaring or reporting the transfer of money can result in penalties and even loss of the money sent. |
Yes, the money can be used to study outside of Canada. If you are sending money abroad for education: You may have to declare international transfers of large sums of money to the Canadian government. The student may also need to report receiving these funds in their country of study. Not declaring or reporting the transfer of money can result in penalties and even loss of the money sent. |
| More details | Learn more about RESP | Learn more about TFSA |
RESP Overview: Tax-deferred investment growth with education support
An RESP is an education-specific account that offers:
- Tax-deferred investment growth
- Educational support via government incentives, like the CESG.
- Tax-efficient withdrawals – The beneficiary pays tax on grants, bonds, and investment growth withdrawals. Since they will often have little income as a student, families may benefit from low-tax withdrawals.
How an RESP can help fund an education
One of the biggest benefits of opening RESPs is how much support you could get from your family, friends, and the government to significantly increase your education-focused savings. But be aware that no matter how many people contribute to your beneficiary’s savings, there is still a $50,000 lifetime contribution limit per beneficiary.
With the CESG’s 20% match on RESP contributions up to $500 per year (and a lifetime maximum of $7,200 per beneficiary), you could get a significant boost towards these savings. Additional incentives may apply based on your province/territory of residence or family income.
Missed a year or opened an RESP late? Find out how to catch up on RESP contributions and government incentives
Important RESP considerations
Unused RESP funds: If the beneficiary decides not to pursue post-secondary education or doesn’t use all of the available RESP funds, there are other options. But some options may be subject to additional taxes.
TFSA Overview: Flexible, tax-free savings
A TFSA is a flexible, tax-free account that allows Canadians to save and grow investments for a wide range of goals, including education.
How a TFSA can help fund your child’s education
The big benefits of saving for your child’s education in a TFSA are its flexibility, and that money invested in a TFSA can grow and be withdrawn tax-free.
This means that with a TFSA, there are:
- No withdrawal restrictions.
- You don’t have to worry about potential penalties if you make a withdrawal that doesn’t qualify as an educational-related expense.
- You don’t have to worry about withdrawals affecting other income-based government benefits you may have.
- If your child doesn’t pursue post-secondary school, you can use the funds in the account for anything else. This makes a TFSA an appealing option for families seeking flexibility.
TFSA or RESP? Which one is right for me?
Choosing between a TFSA or an RESP to save for your child’s education depends on your goals and flexibility needs:
- For education-focused savings: An RESP provides targeted savings with government incentives, which can accelerate your savings for education.
- For flexibility: If your needs change or extend beyond education, a TFSA offers tax-free growth and freedom to use funds as you need.
- Using both: Many families benefit from using both accounts, maximizing RESP grants for education while keeping a TFSA for supplementary or flexible savings.
RESP vs TFSA FAQs
Yes, you can use funds in a TFSA for your child’s education without affecting the RESP grants and incentives.
For funds in a TFSA:
If your child decides not to pursue post-secondary education, you can use the funds in the TFSA for other goals. There are no penalties or restrictions tied to how you use those savings.
For funds in an individual RESP:
- Contributions can be withdrawn tax-free.
- You’ll need to return all government grant funds.
- You’ll need to pay income tax and a 20% penalty tax (or 12% for Quebec residents) on any investment growth.
If you have RRSP contribution room, you can defer taxes if you transfer any investment growth in an RESP to your RRSP.
For funds in a family RESP:
If you’ve set up a family RESP and one child doesn’t pursue higher education, you may still have flexibility to use some or all the funds for another child who does go to school. In most cases, the government incentives can be reassigned to the other child within the same RESP, and are subject to lifetime limits.
A tax advisor can help determine your best options.
Yes, you can but only if you open a family RESP. A family RESP can be used for multiple beneficiaries within the family in one account.
Some institutions charge administrative or account maintenance fees for RESPs and TFSAs, so check with your provider to understand potential costs.
More resources
RESP Calculator
Use this RESP calculator to find out how much you need to save to help cover your child(ren)'s post-secondary education costs.
Four smart ways to save for your child’s education
Here’s how you can set money aside (even if you’re on a tight budget) for your child’s education.
This information is meant for educational and illustrative purposes only. Some conditions, exclusions and restrictions apply. Last updated : March 14, 2025.
Legal notes:
1 It’s your responsibility to keep track of your TFSA contribution limits. You can view your contribution limits by calling the Canada Revenue Agency’s Tax Information Phone Service (TIPS) or by logging in to your CRA account. Keep in mind that TFSA contribution limits will change from transactions that occur during the year, which may not be reflected with the CRA until a later time. Reach out to a Sun Life advisor to discuss further.