Registered disability savings plan (RDSP)

A government program that lets you enhance long-term financial security for someone with a severe disability who is eligible for the Disability Tax Credit.

• Contributions are enhanced by the Canada Disability Savings Grant (CDSG) based on the beneficiary's net family income and the amount of each RDSP deposit.
• Contributions may not be required to access the Canada Disability Savings Bond (CDSB).
• Lump sum withdrawals in the form of disability assistance payments (DAP) may be made under certain conditions.
• Lifetime disability assistance payments may begin at any time, but no later than the end of the year the beneficiary turns 60, under certain conditions.
• There can only be 1 beneficiary per RDSP, and 1 RDSP per beneficiary.
• Proceeds from the RRSPs, RRIFs or RPPs (registered pension plan) of deceased parents or grandparents at the time of their death may be rolled over into the RDSP of a financially dependent child or grandchild.
• Unused grant and bond entitlements for a given year can be carried forward for the next 10 years.
• In addition, if the RDSP beneficiary is also a beneficiary of an RESP and has a severe and prolonged mental impairment that will prevent him or her from pursing a post-secondary education, under certain conditions the accumulated RESP income can be rolled over to the RSDP without a tax penalty.

• be eligible for the Disability Tax Credit based on the Canada Revenue Agency criteria
• have a Social Insurance Number (SIN)
• be under 60 years of age
• be a resident of Canada when the plan is opened

• Guaranteed fixed-rate investments
• Market-linked guaranteed investment
• Specified-rate RDSP Regular Savings Account

• An RDSP beneficiary over the age of majority who is competent to sign a contract is generally the holder.
• If the RDSP beneficiary is over the age of majority but is not competent to sign a contract, the holder is generally an individual or public department legally authorized to act in the beneficiary's name.
• If the RDSP beneficiary is under the age of majority, the holder can be a legal parent, legal representative or public department legally authorized to act in the beneficiary's name.

• The following may contribute to the plan:
  • the holder
  • anyone with written permission from the holder
• There is no annual contribution limit, but the lifetime limit is $200,000.
• The contribution period is January 1 to December 31.
• Contributions to an RDSP cannot be deducted from taxable income.
• You can pay regular instalments of a minimum of $100. Payment of the minimum must be made monthly.
• Contributions may be made to the plan until the end of the year the beneficiary turns 59.
• To receive the Canada Disability Savings Grant, you must make your contributions to the plan before the end of the year the beneficiary turns 49.

• Your contributions may qualify for the Canada Disability Savings Grant (CDSG) (up to $3,500 per year and $70,000 lifetime limit).
• Low-income families may qualify for the Canada Disability Savings Bond (CDSB) (up to $1,000 per year and $20,000 lifetime limit, without having to make contributions).

The Canada Disability Savings Bond and Grant can be paid into the beneficiary's RDSP until December 31 of the year the beneficiary turns 49.

Lifetime disability assistance payments (LDAPs)

• Lifetime disability assistance payments are recurring withdrawals, subject to a maximum, and once they start, they must continue to be paid at least annually until the beneficiary dies or the plan is closed.
• LDAPs may begin at any age. The first withdrawal must be made at the latest at the end of the calendar year the beneficiary turns 60.

Disability assistance payments (DAPs)

• Disability assistance payments are lump-sum withdrawals that may be paid to the beneficiary at any time under certain conditions.

Each withdrawal contains taxable and non-taxable amounts. Grants, bonds and investment income accumulated in the plan are included in the beneficiary's income for income tax purposes in the year they are paid.

Withdrawals paid do not reduce the beneficiary's eligibility for federal income-based benefits.

Payments from primarily government-assisted RDSPs are subject to a maximum annual withdrawal amount.

If you receive grants or bonds from the government and you wait 10 years after the last contribution before withdrawing money from your RDSP, you will not have to pay any money back. However, if you withdraw money within that 10-year period, you will have to pay back $3 in grants and bonds for each dollar you withdraw from the RDSP, up to the total amount of grants and bonds received during the 10 years prior to the withdrawal.

The assistance holdback amount is the total amount of bonds and grants paid into an RDSP within the last 10 years. When one of the following occurs, the assistance holdback amount must be repaid to the Government of Canada:

• the plan is closed voluntarily
• a disability assistance payment is withdrawn1
• the beneficiary passes away

For calculation examples and to estimate RDSP growth, see Catherine’s example (PDF, 19 KB).

The assistance holdback amount (grants and bonds) must be repaid to the Government, if applicable.

After repayment has been made to the Government, the balance of the RDSP will be paid to the beneficiary's estate, as a disability assistance payment made up of a taxable and a non-taxable portion.