RDSP (Registered Disability Savings Plan)
What is the Registered Disability Savings Plan (RDSP) ?

The RDSP was introduced under the 2007 federal budget for those who qualify for a Disability Tax Credit. It is a special type of savings account sponsored by the Canadian government. Under the program, the government will provide annual assistance in the form of matching grants up to $3,500 per year and bonds up to $1,000 per year.


Who is a RDSP account for?

A RDSP is ideal for parents of disabled children or disabled adults under 60 years of age. In order to setup a RDSP, the beneficiary (person who the account is for) must have a previously approved Disability Tax Credit (DTC) or have an active DTC application on file with the CRA. The beneficiary must also have a valid Social Insurance Number (SIN).There may only be one beneficiary per plan, and that individual may only have one RDSP plan.

Payments from the plan can only be made payable to the disabled beneficiary.


Who can contribute to the RDSP?

Anyone. (with written permission from the beneficiary)


What does RDSP do?

The RDSP helps individuals with a disability start saving for a financially stable future while allowing for withdrawals/payments for immediate use (subject to assistance holdback rules and fair market value calculations.). Unlike other disability assistance, there are no restrictions placed on the beneficiary on what he or she uses the RDSP payments for.

Any money that is contributed to the RDSP is not tax-deductible for the contributor and not taxable for the beneficiary. Any earnings in the RDSP accrue on a tax-deferred basis and the beneficiary is taxed only when payments are received from the plan.


There are 2 payment types from the RDSP:

1. Disability Assistance Payments (DAP) General payments from the plan, including lump sum payments. The beneficiary can request and receive payments from the plan with flexibility. 

2. Lifetime Disability Assistance Payments (LDAP) Annual payments – once started they must continue to be paid out at least once per year. They must begin by the end of the year in which the beneficiary turns 60. Payments are subject to yearly maximum withdrawal amounts. 
RDSP amounts will not affect eligibility for provincial disability benefits in most provinces, such as Ontario’s ODSP.

In addition, RDSP amounts or payments from the RDSP will not affect the disabled beneficiary’s claims for i) GST credits, ii) Canada Child Tax Benefits, or iii) Old Age Security payments.

 Care Benefit Services will Help you to...

•Ensure the beneficiary of the account is first approved for the DTC
•Provide guidance in regards to applying for Bonds/Grants
•Provide guidance towards maximizing contributions
•Provide guidance in regards to available options for Trustees (Banks) who issue RDSPs
•Support with the completion of third-party forms

 

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