Registered Disability Savings Plan (RDSP)

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Registered Disability Savings Plan (RDSP)

A registered disability savings plan (RDSP) is a savings plan that is intended to help parents and others save for the long term financial security of a person who is eligible for the disability tax credit (DTC). Contributions to an RDSP are not tax deductible and can be made until the end of the year in which the beneficiary turns 59. Contributions that are withdrawn are not included as income to the beneficiary when they are paid out of an RDSP. However, the Canada disability savings grant (grant), the Canada disability savings bond (bond), investment income earned in the plan, and the proceeds from rollovers are included in the beneficiary’s income for tax purposes when they are paid out of the RDSP.

Speak to your financial planner to determine what is best for you and is affordable also.

Anyone can contribute to an RDSP- family, friends, neighbours… it gives people who want to help a way to do so!

The money can be invested to grow. It is the best Return on Investment available. Depending on someone’s income, any money saved immediately triples in value. Once investment decisions are made, it can really start to grow!

The RDSP is exempt from most provincial disability and income assistance benefits. It does not get clawed back and it does not reduce disability benefits payments. Click here to find out how your province treats the RDSP.

People with disabilities can choose what to do with the money when it comes out- there are no restrictions on how the money can be spent!

The Registered Disability Savings Plan (RDSP) is a Canada-wide registered matched savings plan specific for people with disabilities. Here are some basics:

For every $1 put in an RDSP account, the federal government can (if your family income is below $91,831) match with up to $3! This is the Canada Disability Savings Grant.
For people living on a low-income (less than $30,000), the federal government will put in $1000 each year for 20 years! This is the Canada Disability Savings Bond.
For people living on an income between $25,356 – $45,916, they can still receive a partial bond.

Why Should I Open an RDSP Account?

Not only, you receive the tax deferral benefits in the RDSP Plan, you also receive up to $70,000* in Grants and up to $20,000* in bonds in your RDSP Plan.

Canadian Savings Disability Grants match contributions to the RDSP account between 100-300%, depending on Family income, up to the age of 49. i.e. if income is higher than the CSDG threshold amount $1,000 gets $1,000, if it is lower, $1,500 gets $3,500 in grants.

Who is Eligible for RDSP?

There are certain requirements that must be fulfilled before a person can invest in an RDSP, for both the beneficiary and the holder.

The Beneficiary:

Must be eligible for the Disability Tax Credit (DTC) with a CRA approved Disability Tax Credit Certificate (For T2201)
Must possess a Social Insurance Number (SIN)
Must be a resident of Canada
Must be under the age of 60; age 49 or less to receive grants and bonds
Must have only one RDSP account at any given time

The Holder

For beneficiaries under the age of majority, holder must be a parent or legal guardian authorized to act on their behalf;
For beneficiaries over the age of majority, holder must be authorized to act on their behalf;
The beneficiary may open an account as the holder if they are personally legally able to enter into a contract.