The Registered Disability Savings Plan, or RDSP, is a registered plan for parents or guardians to save for the future of a Canadian with a disability. Like an RESP, you do not receive a tax deduction on contributions to a Registered Disability Savings Plan but the money can grow while sheltered from tax, with the beneficiary being taxed only when they withdraw the money. There are no annual contribution limits, but a lifetime limit of $200,000. While the government includes grants and bonds, these need to stay in for at least 10 years to avoid being clawed back.
Canada Disability Savings Grant (CDSG)
The Canada Disability Savings Grant can match as much as 300% of the contribution into an RDSP with a lifetime grant of up to $70,000. To be eligible for the CDSG, you must be eligible for the Disability Tax Credit and under 49 years of age.
If the family income is less than $81,941 then the beneficiary will receive 300% matched on the first $500 contributed and 200% on the next $1,000. So if the beneficiary’s family were to contribute $1,500 a year then the government would include a grant of $3,500 that same year. A beneficiary with a family income above $81,941 can receive a 100% match on the first $1,000.
Canada Disability Savings Bond (CDSB)
The Canada Disability Savings Bond is an additional deposit available from the government for those with a family income of less than $40,970. Other than the low income considerations, the CDSB has the same requirements as the Canada Disability Savings Grant.
Family incomes of less than $23,855 are eligible for the complete annual bond of $1,000, with a total lifetime. The bond reduces as incomes increase from $23,855 up to $40,970.
If you know someone who collects the Disability Tax Credit but may not know about the under publicized Registered Disability Savings Plan, please let them or their family members know about this great program which is available through all the major banks.
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You say that the plan is for parents or guardians, while it is a great tools for parents to save for the childrens future it is also for adults with a disability to save for themselves. A parent or guardian can open the plan on behalf of a dependent, but any Canadian of legal age can open the plan and make contributions to the plan for their own benefit in the future.
As a financial planner with a disability, I have not only helped other opens plans, but have opened my own as well. I would be happy to answer any questions anyone might have about the plan.