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Registered Disability Savings Plan
Retirement Planning, Tax Planning

RDSP: Ever heard of it?

The Registered Disability Savings Plan (“RDSP”) is one of the least talked about Registered Savings Plans on the market today.  To be honest, this plan is becoming more recognized because the Government of Canada is marketing the plan for Canadian’s with a disability.  In the past, RDSP’s have flown under the radar; however, throughout the past year, more and more people have been asking about it.

It is a little more complicated than your typical RRSP or RESP.

What are the features?

  • For every $1 contributed to the RDSP the government will match up to $3 (that’s a 300% matching program).
  • The maximum government grant that can be received over the lifetime of the RDSP is $70,000 (or $3,500 annually).
  • For lower income families, the government will contribute an extra $1,000, annually for up to 20 years, in the form of a $1,000 Canada Disability Savings Bond.
  • The maximum lifetime contribution to an RDSP is $200,000.

To qualify for an RDSP, the individual must:

  • Be a Canadian citizen.
  • Have a Social Insurance Number.
  • Meet the qualifications for the Disability Tax Credit (“DTC”)[1]. The advantage of the DTC is that it reduces income taxes in recognition of the disability; and this claim can be made annually on the individual’s personal income tax return.

As you begin to learn more about RDSP’s, keep in mind:

  • RDSP’s in retirement:
    • The individual must begin withdrawals from the RDSP when they turn 60.
  • RDSP’s are for the long-term:
    • If funds are withdrawn before age 60 and contributions have been made in the last 10 years, the government may claw back their grant portion.
  • RDSP’s can end:
    • If the individual no longer qualifies for the DTC, they must wrap up their RDSP by the next calendar year. At that time, there are rollover options they can pursue.

There you go—a Cheat Sheet on RDSP’s! If you would like more information or have any questions do not hesitate to reach out.

[1] www.cra-arc.gc.ca\disability\

January 9, 2017/by Andrew Gordon
Tags: disability tax credit, financial advisor, financial planning, RDSP, Registered Disability Savings Plan, registered savings plan, retirement, retirement planning, tax credit, tax planning, taxes
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