The Registered Disability Savings Plan (RDSP) started back in 2008 and is directly involved with the disability tax credit. This savings plan is funded by the federal government and is a long term savings account designed for financial security.
To be eligible for RDSP you have to be a Canadian resident with a social insurance number, be 59 years of age or younger, and qualify for the disability tax credit. Only one recipient can be named to an RDSP and you can only have one RDSP as a recipient. If you do not have the capabilities to manage your finances as the individual requiring the savings plan then the holder of the plan must be a qualified family member. Like the DTC, you can go back up to 10 years’ worth of benefits. The amount of years will be determined by how many years back you were able to go with your disability tax credit.
How the Savings Plan Works:
A Registered Disability Savings Plan is able to be opened without any contributions. Once the plan holder deposits money into the account, the beneficiary will have immediate profit. At the age of 18 for the RDSP to be based on your income(not your guardians) it is necessary to have filed an income tax return for the previous two years. However, if this is not the case, then the RDSP will be based on your parents income until you turn 20. Once opening a RDSP you will have to file income tax yearly to keep your plan. You will then qualify for a Bond and a Grant for your account.
Bonds:
A bond is solely associated with your income and requires no contributions to generate funds. The amount that you receive in your bond is based off of the amount of income you receive.
| Annual Family Net Income | Canada Disability Savings Bond (Annually) |
| $30,000* or less | $1,000 |
| Between $30,000* and $45,916* | Prorated amount of $1,000 |
| More than $45,916* | $0 |
The bond has a maximum profit of $20,000, however if you invest those savings you could have up to $69,830 after 30 years, this is assuming a 6% return rate. If you are opening a bond with an annual family net income of $45,916*, you have the ability to go back ten years from the opening year and receive payments off of each year. This could result in receiving up to $10,000 if you have qualified for the payments in the past years.
Grants:
Grants work differently than bonds by not only basing the earnings on your income but by also basing it on your investments towards the account. You are eligible to receive a grant until December 31st of the year in which the beneficiary turns 49 years old.
| Annual Family Net Income | Matching Grant on Annual RDSP Contributions | Maximum Annual Grant |
| Less than or equal to $91,831* | On the first $500 in annual contributions ($3 for every $1 contributed) | $1,500 |
| On the next $1,000 in annual contributions ($2 for every $1 contributed) | $2,000 | |
| Greater than $91,831* | On the first $1,000 in annual contributions ($1 for every $1 contributed) | $1,000 |
If you are able to accomplish a maximized RDSP it would result in $395,265 total plan value in 30 years assuming a 6% return rate. As stated, before a Registered Disability Savings Plan is a long term investment and this is due to the fact that you cannot withdraw any money from a bond or a grant until at least ten years after starting the plan. Any withdrawal from the account before that time will result in paying back all grants and bonds that are not matured to the government. The only time you would be able to withdraw money without a full maturity, is under the circumstances of a medical crisis, or a housing crisis. The RDSP has zero impact on the other government funding programs listed below:
- Old Age Security (OAS)
- Guaranteed Income Supplement (GIS)
- Canada Pension Plan (CPP)
- HST/GST Benefit
- Most Provincial Disability Support Programs
To open a Registered Disability Savings Plan you will need to visit your financial organization, or access a financial advisor who specializes in RDSP’s. If your financial organization does not offer the RDSP, Grants, and Bonds then you will need to access a financial organization, or advisor, that does. If you have a RDSP with one financial organization you have the ability to transfer it to another. You will need to go through the process of completing a Registered Disability Savings Plan Transfer and the Revocation of Request for Canada Disability Savings Grants and/or Canada Disability Savings Bonds. Both financial organizations must sign off for the transfer to be approved.
For more information on the Registered Disability Savings Plan you can visit https://www.rdsp.com/ . This website is a non-profit, third party organization that will be helpful with providing more in depth details along with stories about the RDSP, a RDSP calculator, a step by step guide for applying, and more.
For local support and additional information feel free to contact: Daniel Martens Martens Financial 13A Myrtle Street, Stratford, PE C1B 1P4 Phone: (902)-394-0502 Email: daniel@martensfinancial.ca
