RDSP’s Explained

A registered disability savings plan (RDSP) is a savings plan intended to help parents and others save for the long term financial security of a person who is eligible for the disability tax credit.


Registered Disability Savings Plan (RDSP)

A registered disability savings plan (RDSP) is a savings plan intended to help parents and others save for the long term financial security of a person who is eligible for the disability tax credit. An RSDP account allows the account holder to grow assets tax free and capture additional government grants.

All Canadian residents under the age of 60 who have a SIN and are eligible for the Disability Tax Credit are entitled to open an RDSP.  The Federal Government will match your contributions up to $70,000 in Canada Disability Savings Grants and low-income families may qualify for additional help of up to $20,000 in Canada Disability Savings Bonds.

What is an RDSP?

The Registered Disability Savings Plan (RDSP) is a registered matched savings plan specifically for Canadians with disabilities.

Who can open a RDSP?

A person who is the age of majority, is eligible for the Disability Tax Credit, and has the capacity to manage his or her finances.

The legal parent of a child with a disability who has not reached the age of majority, or a guardian or other representative who is legally authorized to act on behalf of a person with a disability.

When a plan is opened by a beneficiary’s legal parent, the parent may continue to be the plan holder after the beneficiary reaches the age of majority.

What are the benefits of an RDSP?

Similar to an RRSP, the RDSP allows assets to be invested and grow tax-free.  Funds held in an RDSP, as well as funds withdrawn from an RDSP are fully exempt in most provinces from determining eligibility for Disability Benefits and do not reduce disability benefits payments.

There are no restrictions to how funds can be spent when they are withdrawn, providing people with disabilities the freedom to choose how to allocate the funds.

Anyone can contribute to an RDSP at anytime.  It allows people who want to help have an effective way to do so.

Every $1 contributed can be matched with a $3 federal government contribution, if the household income in which the disabled person resides is below $95,259.  This matching is the Canada Disability Savings Grant

How much can be contributed to an RDSP?

The lifetime contribution limit is $200,000.  There is no limit to how much may be contribute in any given year.  Anyone may contribute to the RDSP with written consent from the RDSP holder.

How are funds withdrawn?

Disability Assistance Payments (DAP’s) can we paid to the beneficiary at anytime after the RDSP is opened.  Similar to an RRSP, one the RDSP account holder turns 60, the account is required to make annual withdrawals or Lifetime Disability Assistance Payments (LDAPs).  The annual withdrawals will continue for the life of the beneficiary or until the account is fully drawn down.

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