Registered Disability Savings Plans
RDSP: Financial Security for Loved Ones
A Registered Disability Savings Plan (RDSP) is a tax-advantaged plan designed to secure the financial future of individuals with disabilities. For families, athletes, and business owners, an RDSP combines government grants and bonds with tax-deferred growth to provide long-term support.
What Is a RDSP?
An RDSP is a registered account under the Canadian Income Tax Act that supports individuals eligible for the Disability Tax Credit (DTC). Contributions grow tax-deferred, and generous government grants and bonds enhance savings. Withdrawals are taxed in the beneficiary’s hands, often at low rates.
Key Features:
Government Incentives: Up to $70,000 in Canada Disability Savings Grants (CDSG) and $20,000 in Bonds (CDSB).
Tax-Deferred Growth: Investment earnings are not taxed until withdrawn.
Contribution Limits: $200,000 lifetime limit per beneficiary, no annual cap.
Who Should Consider a RDSP?
Families: Parents or guardians planning for a loved one’s financial security.
High-Income Individuals: Leverage grants and tax-deferred growth.
Athletes: Use high earnings to fund RDSPs for family members with disabilities.
Caregivers: Ensure long-term support for DTC-eligible individuals.
Key Benefits
Generous Government Support: CDSG matches contributions up to 300% for lower-income families; CDSB provides up to $1,000/year for eligible beneficiaries.
Low-Tax Withdrawals: Payments are taxed in the beneficiary’s hands, often at minimal rates.
Flexible Investments: Choose stocks, bonds, or GICs to grow savings.
Long-Term Planning: Funds can be used for any purpose benefiting the individual.
No Impact on Benefits: RDSP payments do not affect most provincial disability benefits.
How It Works
Confirm Eligibility: The beneficiary must qualify for the DTC.
Open an RDSP: Set up through a financial institution or advisor.
Contribute: Add up to $200,000 over the plan’s lifetime.
Claim Incentives: Apply for CDSG and CDSB based on income and contributions.
Withdraw: Funds can be accessed as Disability Assistance Payments (DAPs) or Lifetime Disability Assistance Payments (LDAPs), taxed to the beneficiary.
Frequently Asked Questions (FAQs)
Q: Who can contribute to an RDSP?
A: Anyone can contribute (e.g., parents, guardians, or the beneficiary), but the beneficiary must be DTC-eligible.
Q: What is the contribution limit?
A: $200,000 per beneficiary, with no annual limit.
Q: Are RDSP withdrawals taxable?
A: Grants, bonds, and earnings are taxed in the beneficiary’s hands; contributions are tax-free.
Q: What happens if the beneficiary passes away?
A: Funds are paid to the estate, with grants and bonds potentially repayable to the government.
Q: Can non-residents open an RDSP?
A: No, the beneficiary must be a Canadian resident eligible for the DTC.
Why Choose New World Agency?
We specialize in creating RDSP strategies for families and high-performance individuals, ensuring maximum government incentives and tax efficiency. Our team collaborates with your advisors to build a plan that protects your loved one’s future.
Secure Their Future Today
An RDSP is a powerful way to provide lasting financial support. Let us help you start planning.