What is an RDSP?
A Registered Disability Saving Plan (RDSP) is a fairly new registered investment plan for Canadians with disabilities. RDSPs encourage individuals and families to save for the long term financial security of those with disabilities.
Who is eligible for an RDSP?
To be eligible, a beneficiary* must meet the following criteria:
- Canadian Resident
- Have a Social Insurance Number
- Be under 60 years of age
- Eligible for the Disability Tax Credit (DTC)
- Anyone may contribute with written permission from the plan owner
- Contributions are not tax deductible
- Contributions grow tax deferred
- There is a $200,000 lifetime contribution limit per plan beneficiary
- There is no annual contribution limit
- Contributions can be made until December 31st of the year the beneficiary turns 59
More information on RDSPs
Based on a net family income testing, the contributions may be eligible for the Canada Disability Savings Grant (CDSG). This has a lifetime Maximum of $70,000 and a yearly maximum of $3500.00. But, start your plans early. The last day of eligibility for the CDSG is December 31st of the year the beneficiary turns 49.
Beneficiaries with lower net income could be eligible for the Canada Disability Savings Bond (CDSB). Possibly another $20,000, and remember, no contributions need to be made to obtain the Bond!
RDSP income will not impact the beneficiary by way of interfering with any of the following government programs:
- Old Age Security (OAS)
- Guaranteed Income Supplement (GIS)
- Canada Pension Plan (CPP)
- Good and Services Tax Benefit (GST BENEFIT)
As you can appreciate, this list may not be inclusive and there are rules on withdrawing from an RDSP. Contact your Specialty Wealth and Financial advisor to learn more on withdrawing from your RDSP. Your financial security advisor can help you understand which strategy is most appropriate for you.
*All our advisors are registered with Quadrus Investment Services Inc. RDSP’s are Mutual Fund based and are placed through Quadrus Investments Services as the Dealer. See www.ronking.ca to see the connection between Specialty Wealth & Financial, Quadrus and your Financial Security Advisor. Specialty Wealth and Financial is contracted to London Life Insurance through it’s Freedom 55 division. In addition to insurance products through London Life, all our advisors are registered to deal in Mutual Funds. They are registered with Quad-rus Investment Services Inc. Mutual Funds are offered by the Advisor individually through Quadrus.
For a printer-friendly PDF version of this article, please click here.
If you’d like to know more about RDSPs, please don’t hesitate to contact us via the form below: