Registered Disability Savings Plans
Registered Disability Savings Plan (RDSP) is a registered saving plan
that is intended to help parents and others save for the long-term
financial security of persons with severe or prolonged disabilities who
are eligible for the Disability Tax Credit. Clients can now open an
RDSP account through their BMO Nesbitt Burns advisor.
Benefits of a Registered Disability Savings Plan
deposits can grow on a tax-deferred basis. While contributions to an
RDSP are not tax deductible, income earned on plan deposits grow on a
tax-sheltered basis until the funds are withdrawn. Amounts withdrawn
from an RDSP are taxed as ordinary earned income.
deposits are eligible for the Canada Disability Grant (CDSG).
Contributions to an RDSP may qualify for federal government grants of up
to $3,500 per year (lifetime maximum of $70,000 available).
RDSP program may qualify for additional payments under the Canada
Disability Savings Bond. Lower-income families who wish to participate
in an RDSP may be eligible for annual payments of up to $1,000 per year
(lifetime maximum of $20,000 available).
- Up to $200,000 may
be contributed to an RDSP over the life of the plan per beneficiary.
Deposits can be made in lump sum or periodic payments and will be
accepted by the plan until the end of the year in which the beneficiary
turns age 59, deceases, no longer is deemed a Canadian resident, or no
longer qualifies for the CRA’s individual disability tax credit.
Registered Disability Savings Plan Eligibility
legal parent, guardian, or an individual who is legally authorized to
act on behalf of the beneficiary can be named as an Account Holder. A
public department, agency or organization that is legally authorized to
act on behalf of the beneficiary may also be named as an Account Holder.
A beneficiary, who has reached age of majority, may also be named as an
- There are no restrictions as to who can
contribute to an RDSP. Anyone can make a contribution to a plan provided
that the contributor has the written consent of the Account Holder.
individual who is a Canadian resident and under 60 years of age can
become an RDSP beneficiary. The individual must be eligible to receive
the disability tax credit as described by the Canada Revenue Agency and
be a Canadian resident.
- Only one beneficiary per plan is allowed. Multiple beneficiaries are prohibited.
- An RDSP can be held in joint ownership. Parents can be named Account Holders, where required.