What is an RDSP?
A Registered Disability Savings Plan (RDSP) is a long-term savings program designed to help Canadians with disabilities build financial security. Contributions grow tax-deferred, and eligible families can receive substantial government funding through grants and bonds to boost savings.
- Tax-Deferred Growth: All investment growth in an RDSP grows tax-deferred until withdrawal.
- Government Contributions: Eligible beneficiaries can receive up to $90,000 in lifetime support through Canada Disability Savings Grants (CDSG) and Canada Disability Savings Bonds (CDSB).
- Contribution Rules: No annual contribution limits, and total lifetime contributions can be up to $200,000.
- Flexible Contributions: Friends and relatives may contribute with written permission.
Benefits of an RDSP
- Government Grants: Receive matching contributions of up to $3,500 per year, based on family income..
- Disability Savings Bonds: Low-income families may receive up to $1,000 per year without making any contributions.
- Long-Term Financial Security: Designed to provide lifelong stability for a beneficiary with a disability.
- Does Not Affect Government Support: RDSP savings and withdrawals generally do not impact disability or income support benefits.
- Tax-Deferred Growth: Investments grow tax-sheltered for decades.
How to Open an RDSP
- Confirm DTC Eligibility: The beneficiary must qualify for the Disability Tax Credit.
- Choose a Provider: Banks, credit unions, or financial institutions offering RDSPs.
- Submit Required Documents: SIN, proof of DTC eligibility, and legal representative documentation if needed.
- Start Contributions: Lump sum or regular automated contributions.
Conclusion
An RDSP is one of the most powerful financial tools available for Canadians with disabilities, allowing families to build long-term security with government support and tax benefits. Maximizing grants and bonds can significantly enhance lifetime savings and protect the future of a loved one.
