Registered Disability Savings Plan (RDSP)
What is RDSP?
A registered matched savings plan helps parents and others save for the long term financial security of a person who is eligible for the disability tax credit (DTC).
This savings plan grows faster as taxes on the investment income and capital gains are deferred.
Anyone with written consent from the plan holder can contribute for the beneficiary and funds can be withdrawn for any purpose that benefits the person with the disability.
The Federal Government will match your contributions (limits apply1) up to $70,000 in Canada Disability Savings Grants and low-income families may qualify for additional help of up to $20,000 in Canada Disability Savings Bonds.
Anyone Can Contribute
Anyone can contribute as a gift for the beneficiary with written consent from the plan holder.
You can open an RDSP and be the plan holder if you are:
- A person with a disability who is the age of majority and has the capacity to manage his or her finances; or
- The legal parent of a child with a disability who has not reached the age of majority; or
- A guardian or other representative who is legally authorized to act on behalf of a person with a disability
Yes, but only if the parent has been legally appointed as a guardian of the beneficiary or is otherwise legally authorized to act for the beneficiary. If a parent opens an RDSP when their child is a minor, the parent can remain as plan holder when the child later reaches the age of majority.
There is not an annual limit; however, there is a lifetime limit of $200,000.
Yes, you can contribute the full $200,000 in one year, but doing so may forfeit your ability to maximize on the Canada Disability Savings Grant, which is provided on a “matched” basis to a maximum annual limit. Contributions cannot be reversed.
Each withdrawal includes taxable and non-taxable amounts. Contributions to the plan that are withdrawn are not included in the income of the beneficiary. The Canada Disability Savings Grant, Canada Disability Savings Bond and investment income in the plan are included in the beneficiary’s income when withdrawn from the account.
Mutual Funds are sold by Flip My Life Inc. There may be commissions, trailing commissions, management fees and expenses associated with mutual fund investments. Please contact a financial advisor and read the Fund Facts before investing. Mutual fund securities are not insured by the Canada Deposit Insurance Corporation. For funds other than money market funds, unit values change frequently. Past performance does not determine future performance.
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Financial planning services and investment advice are provided by Flip My Life Inc.