Withdrawals from RDSPs

RDSP withdrawals are also known as disability assistance payments. There are two types of payments from an RDSP – Lifetime Disability Assistance Payments (LDAPs) and Disability Assistance Payments (DAPs).

Lifetime Disability Assistance Payments

• LDAPs are recurring annual payments that once started, must be paid until the plan is terminated or the beneficiary has died.


• LDAPs may begin at any age, but must commence by the end of the year in which the beneficiary turns 60


• Payments are generally limited to a maximum tied to the fair market value of the plan and the beneficiary’s life expectancy (age 80 in most cases). The maximum amount does not apply where a physician certifies that the RDSP beneficiary is not expected to survive beyond five years.

Disability Assistance Payments

• DAPs are lump sum payments made to the beneficiary or the beneficiary’s estate


• DAPs may only be made if the plan’s fair market value after payment will be more than the Assistance Holdback Amount (CDSGs and CDSBs received in the 10-year period prior to a disability assistance payment). Both LDAPs and DAPs can be used for disability or non disability related expenses.

Beneficiaries are not required to pay taxes on their RDSP until withdrawals are made or the RDSP is terminated.

Taxation of withdrawals

Disability assistance payments generally consist of original contributions, investment income, CDSGs and CDSBs (subject to repayment obligations). Because original contributions are non-deductible when contributed, they are non-taxable on withdrawal. Investment income, CDSGs and CDSBs are fully taxable to the RDSP beneficiary when received. RDSP holders cannot encroach on capital alone, as each payment will consist of both taxable and non-taxable amounts. Generally speaking, the proportion of the payment that would be non-taxable is the same as the proportion of total contributions to total plan value. If an RDSP beneficiary has little or no other income, a portion, if not all of the withdrawal can be received without incurring any tax liability due to the combined effect of the disability tax credit and the basic personal amount on the beneficiary’s tax return. Taxable portions of withdrawals will be reported on a T4A-RDSP tax form.

Note: RRSP or RRIF proceeds transferred from deceased parent or grandparent will be taxable to the RDSP beneficiary.