What is an RDSP?

A Registered Disability Savings Plan (RDSP) is a savings plan designed specifically for people with disabilities in Canada. It’s intended to assist parents and others in planning for the long-term financial security of their relatives or others with disabilities that are eligible for the Disability Tax Credit (DTC)


Benefits of an RDSP

Tax Sheltered Savings for Future Disability Income

An RDSP will allow holders to invest up to $200,000 in a tax-deferred plan on behalf of their relatives with disabilities. The federal government will pay CDSG of 100% up to 300% depending on the beneficiary’s family income, as well as the CDSB of up to $1000 per year to low-income individuals with disabilities.

Provincial Disability Benefits Unaffected

RDSP in Ontario are exempt as an asset and income when determining a person’s eligibility for provincial disability benefits. Also having an RDSP will have no impact on federal benefits such as the Canada Child Tax Benefit (CCTB), the Goods and Services Tax Credit, Old Age Security or Employment Insurance.

Canada Disability Savings Grant (CDSG)

The federal government will pay a CDSG of 300, 200, or 100 percent, depending on the Beneficiary’s family income.  An RDSP can receive a maximum of $3,500 in CDSG in one year.  The life time maximum of $70,000 can be earned until the end of the calendar year in which the person turns 49.

Canada Disability Savings Bond (CDSB)

The CDSB is paid to low-income families where the net family income is $44,701 or less, The CDSB maximum is $1000 per year, based on family income, is paid into an RDSP without any contributions being made. The CDSB can be paid up to a lifetime maximum of $20,000, up until the end of the calendar year in which the person turns 49.


Who can contribute to an RDSP?

Anyone can contribute to an RDSP with the written permission of the plan holder. The plan holder is the person who opens the RDSP and makes or authorizes contributions on behalf of the beneficiary.


RDSP Contribution Limits

There is no annual limit but the lifetime contribution is $200,000 and the contributions are not tax deductible. Contributions are permitted until the end of the year in which the beneficiary turns 59.


Types of RDSP Investments

  • Variable Interest Savings Accounts
  • Term Deposits and GIC’s
  • Credit Union Shares
  • Index-Linked Term Deposits
  • Mutual Funds*
  • Publicly Traded Securities
  • Bonds


Who can become a Beneficiary of an RDSP?

  • A person may be designated as a Beneficiary if they meet the following requirements:
  • Eligible for the Disability Tax Credit (DTC)
  • Valid Social Insurance Number (SIN)
  • Resident of Canada at the time the RDSP is established
  • Under the age of 60, this age limit is not applicable when a beneficiary’s RDSP is opened as a result of a transfer from the beneficiary’s prior RDSP
  • A Beneficiary can have only one RDSP at any time even though the plan may have several holders.


Withdrawals from RDSP

Withdrawals can be taken at any age; however they must begin by the age of 60Usually the holders request the withdrawals. There are two types of withdrawals/payments from RDSPs: Disability Assistance payment (DAPs) & Lifetime Disability Assistance Payments.


Proportional Repayment Rule

For withdrawals from a RDSP, the proportional repayment rule requires that, for each $1 withdrawn from an RDSP in the 1- years preceding the withdrawal be repaid to the federal government, up to a maximum of the Assistance hold back amount (AHA). Repayment amounts are based on the order in which they were paid into the RDSP beginning with the oldest amounts.


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*Mutual funds are offered through Credential Asset Management Inc.  Unless otherwise stated, mutual fund securities and cash balances are not insured or guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions.