Registered Disability Savings Plan
Registered Disability Savings Plans (RDSPs) help Canadians with disabilities and their families save toward long-term financial security.
An RDSP is a special program that helps Canadians with disabilities and their families save for long-term financial needs such as future medical and living costs. Like a Registered Education Savings Plan (RESP), the investment income is tax-deferred and you may be eligible for government assistance.
The benefits of a Registered Disability Savings Plan include:
Government assistance: To help your savings grow faster, the government provides grants and bonds (see CDSG section in next column).
Tax-deferred growth: While contributions to the RDSP are not eligible for a tax deduction, income earned grows on a tax-deferred basis until the funds are withdrawn. Upon withdrawal, the amount is taxed as income.
No annual contribution limit: Contributions can be up to a lifetime limit of $200,000. In addition, anyone can contribute with the written permission of the plan holder. Contributions can be made up until the end of the year when the beneficiary turns 59.
Ability to make withdrawals: There are two ways a beneficiary of an RDSP can withdraw funds:
1. Annual withdrawals
- Also known as Lifetime Disability Assistance Payments (LDAPs)
- Begin by the end of the year in which the beneficiary turns 60
- These annual payments will then continue for the life of the beneficiary
2. One-time withdrawal
- Also known as a Disability Assistance Payment
- Can be paid to the beneficiary any time after the RDSP is established
Canadian Disability Savings Grant
The Canada Disability Savings Grant (CDSG) is another way for the federal government to contribute money to an RDSP.
When a contribution is deposited into the RDSP, the federal government will also put in some money. The amount of the CDSG is based on the beneficiary’s family income:1
Beneficiary’s family income: $89,401* or less
$3 for every $1 contributed
$2 for every $1 contributed
Beneficiary’s family income: More than $89,401*
$1 for every $1 contributed
* The beneficiary family income thresholds are indexed each year to inflation. The income thresholds shown are for 2015.
For more information on how to help your stroke survivor make the most of their health benefits please contact:
Planned Giving Department
1-800-263-3463 ext. 7292
Note: the information found in this article was compiled to the best of our understanding. Anyone who is looking to open an RDSP should seek professional advice.
1 Canadian Revenue Agency website. www.cra-arc.gc.ca/ menu-eng.html. Accessed on 22 March, 2016.