Who is eligible to open an RDSP?
You can open an RDSP if you:
- Have been approved for the Disability Tax Credit (DTC)
- Have a valid Social Insurance Number (SIN)
- Are 59 or younger
- Are a Canadian resident
How do I know if I’ve been approved for the Disability Tax Credit (DTC)?
Applying for the DTC involves taking the T2201 (DTC) form to your medical practitioner to be completed and submitting it to the Canada Revenue Agency (CRA) for approval. If you’ve done this, you can find out if you’ve been approved in the following ways:
- You’ve received a Notice of Determination from the CRA that states if you’ve been approved, and if so, for which years.
- You can check your CRA My Account online, on the Disability Tax Credit section, under the Benefits & Credits tab.
Who can manage as RDSP account?
RDSP accounts consist of three main roles:
- Beneficiary – person with the disability for whom the RDSP is opened on behalf of, and the recipient of the funds.
- Holder(s) – person who actively manages the RDSP.
- Primary Caregiver(s) - (relevant only for beneficiaries who are 28 years of age or younger) – person who has or had received the Canada Child Benefit (CCB) for the beneficiary.
Roles are determined based on factors such as age and contractual competence (ability to manage financial affairs independently).
One person can hold multiple roles, for example an adult beneficiary is usually the holder of their account. Each role can also be assigned to different individuals, for example a minor beneficiary could have both their parents as holders and their mother as the primary caregiver.
What if I already have an RDSP account with a different financial institution but I’m interested in your service?
No worries, you can simply transfer your current RDSP over and we can take it from there. We’ll assist you with the transfer process and evaluate your RDSP as if it was just opened, allowing you to experience all the same benefits of our service.
What does the government contribute?
The government contributes to your RDSP through the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB). Contributions are made up until the calendar year you turn 49 and the amount you receive is calculated based on your family income and how much you put in.
- Canada Disability Savings Grant (CDSG) - You can receive up to $3,500 per year, up to a maximum of $70,000 total through the CDSG.
- Canada Disability Savings Bond (CDSB) - You can receive up to $1,000 per year and up to a maximum of $20,000 total through the CDSB.
Is there a limit to how much I can contribute to my RDSP?
There is a lifetime limit of $200,000 on RDSP accounts, but no limit on how much you can contribute on an annual basis. While there is no annual limit, your contributions will be matched up to a maximum of $3,500 per year. Once the annual limit is reached, any further contributions you make in the same year will not attract any grant. Planning contributions is essential to ensure that you’re able to take advantage of all the benefits available to you.
Who can contribute to my RDSP?
You’re not the only person who can contribute funds to your RDSP. Anyone can contribute to building your financial security including your family, friends, etc.
Do I have to contribute funds into my RDSP to receive money from the government?
There are two ways which the government contributes to your RDSP. The Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB).
The grant works as a matching program, and you can only receive it if you put money into your RDSP. Your contribution will be matched at rate tied to your household annual income.
The bond is not dependent on your contributions. You will automatically receive the bond on a yearly basis if your household income falls into the designated threshold (household income over $57,375* is not eligible to receive the bond).
*Threshold is adjusted annually for inflation
I’ve had the DTC for many years but never opened an RDSP. Did I miss out on receiving funds from the government?
The Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) are available retroactively up to ten years. If you were eligible to open an RDSP for prior years, upon your account opening the government will evaluate the years you could have received the grant and bond and apply it retroactively.
Any bond you could have received will automatically be deposited to your RDSP, without you having to do anything. You will also be able to catch up on any grants that were available in those years, with an annual maximum of $10,500.
How can I maximize the potential of my RDSP?
Have your RDSP managed. The RDSP is a valuable opportunity to plan for your future. Unfortunately, it can be a complex process to ensure that the RDSP is being fully utilized for all its incredible benefits.
When considering factors that affect your RDSP such as contribution rules (income thresholds, annual and lifetime limits, carry-forward) withdrawal rules (assistance hold back amounts, DAPs vs LDAPs), special circumstances (SDSPs, death of a beneficiary, losing DTC status), having an expert manage and map out a plan for you to get the most of your RDSP can be critical. And that is only the beginning.
Investing your RDSP gives the funds a chance to grow even more, beyond your and the government’s contributions. The amount of growth depends on how you invest your funds. Designating a professional to oversee and manage the funds dramatically increases the potential of your RDSP and sets your future up for success.
When can I start taking money out?
There are two ways to withdraw money from your RDSP:
Lifetime Disability Assistance Payments (LDAP) – designed to provide income to the beneficiary, LDAPs are regular payments made to the beneficiary that once started, cannot be stopped. Once the beneficiary reaches the age of 60 funds must be withdrawn at least annually, however the LDAP can electively be started at an earlier age.
Disability Assistance Payments (DAP) – designed to allow withdrawals outside of the regular LDAP. The DAP is initiated by the holder as a single payment at the time of request.
The RDSP program was developed as a long-term savings plan and was not intended to be regularly withdrawn from, like a chequing account. When withdrawals are requested prematurely, there may be restrictions around the amount that can be withdrawn, and/or repayment of grant and bonds. However, we recognize that sometimes the unexpected can occur. In that event, we will ensure that you are educated and guided on the best path forward to gaining access to your funds while minimizing the impact to your RDSP.
Are there any restrictions on how I can spend the money I’ve withdrawn?
There are no limitations on what you can spend your RDSP funds on, unlike other savings plans such as a RESP, where you can only spend on education related expenses. When you withdraw funds from your RDSP, you can choose to spend those funds on anything.
Will my other disability benefits be affected?
In most cases, your other disability benefits such as provincial income assistance will not be affected. Most provinces consider RDSP income and assets to be exempt and you should be able to continue receiving disability assistance with no change.
However, while Quebec, New Brunswick and Prince Edward Island consider the assets in your RDSP to be exempt, they consider and set thresholds for the income you can receive from your RDSP before it will impact your disability assistance.
What happens if I lose my DTC eligibility?
It is common to receive your DTC approval with an expiry date. When the expiry date approaches, you are required to re-apply if your condition has not changed and you still want to receive the benefits that the DTC and its associated programs have to offer.
If your DTC eligibility expires or is revoked your RDSP can remain open but there will be limitations on your account (no further contributions, additional withdrawal rules). If this occurs, we will manage it under the new status and help you navigate restoring your RDSP back to its full capacity.