Registered Disability Savings Plans (RDSPs)
People with disabilities and their loved ones face a distinct set of financial challenges throughout their lives. To help address these challenges, the Government of Canada introduced the Registered Disability Savings Plan (RDSP) in 2008. Designed to help build long-term financial security for disabled persons, the RDSP makes it easier to accumulate funds by providing assisted savings and tax-deferred investment growth.
Key benefits of an RDSP
- Money contributed grows tax free.
- Anyone can contribute to an RDSP with the written consent of the account holder.
- Contributions can be matched, based on family income, with up to $3,500 a year in Canada Disability Savings Grants (CDSG) and up to $1,000 a year in Canada Disability Savings Bonds (CDSB).
- Carry forward on CDSG and CDSB is available back 10 years or to date of diagnosis.
- The total lifetime contribution for each beneficiary is $200,000, with no annual contribution limits.
- If a parent or grandparent passes away and has a financially dependent child or grandchild, they can transfer up to $200,000 of their RRSP/RRIF or RPP to the dependent’s RDSP on a tax-deferred basis.
To qualify to be the beneficiary of an RDSP, an individual must:
- Be eligible for the Disability Tax Credit
- Be a resident of Canada
- Be less than 60 years of age
- Have a valid Social Insurance Number (SIN)
To qualify to be the account holder of an RDSP, an individual or organization must have a valid SIN or Business Number (BN), and be one of the following:
- The beneficiary of the RDSP
- A legal parent of the beneficiary
- A qualifying family member (beneficiary’s parent(s), spouse or common-law partner)
- A guardian, tutor, curator, or an individual legally authorized to act on behalf of the beneficiary
- A public department, agency or institution legally authorized to act on behalf of the beneficiary
- A qualified entity that is given rights under the RDSP as successor or assignee of a plan holder
Maximize your savings
- Start saving early. Make it automatic by enrolling in a pre-authorized chequing program.
- Take advantage of government grants and bonds and contribute every year to get the maximum annual Canada Disability Savings Grant and Canada Disability Savings Bond.
- Plan withdrawals to avoid federal grant and bond repayments.
For more information on the RDSP or to set up a plan, contact your advisor.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.