Registered Disability Savings Plan

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What is an RDSP?

A Registered Disability Savings Plan (RDSP) is a long-term savings plan for people with disabilities. If you have a disability, you may be eligible to open an RDSP. You can have someone help you apply for an RDSP or have someone apply for it on your behalf.

In BC, the RDSP is exempt as an asset and as income, which means that the RDSP will not impact your income assistance or PWD disability assistance. In addition, the RDSP does not affect Federal benefits such as Canada Pension Plan- Disability (CPP-D), Old Age Security payments or the Guaranteed Income Supplement.

What do you get?

Even if you do not have any of your own money to contribute, an RDSP is a good idea to help you save for your future. The main reason you should open an RDSP is to take advantage of money the federal government will provide on your behalf. If you are under age 50, you may be able to get up to $90,000 in grants and bonds over your lifetime.

  • Bonds Individuals with low incomes may get up to $1,000 per year from government. You do not have to make contributions to your RDSP to receive these.

  • Grants Low and modest-income individuals may get up to $3 for every $1 they contribute to their RDSP. Matching rates are based on your income and how much you deposit, to an annual limit of $3,500.

  • Endowment 150 The Endowment 150 grant offers eligible people with disabilities a one-time grant of $150 to help their Registered Disability Savings Plan (RDSP) grow. To learn more about this opportunity, click here.

RDSP eligibility

You are eligible to open an RDSP if you are:

You will only be able to receive government contributions if you have filed income taxes for the previous two years. If the beneficiary is a child, start filing their income taxes when they are 15 years old, so that the year in which they turn 18 years old you have the option to start to use their personal income to receive grants and bonds.

How to open an RDSP

Step 1

Meet proof of identification requirements

You will need a Social Insurance Number (SIN) and a piece of photo identification.

Step 2

Be approved for the Disability Tax Credit

To open an RDSP, you must be approved for the Disability Tax Credit; you may be eligible for the DTC if you have a mental or physical disability that is expected to last, or has lasted, one year or more. If your application for the Disability Tax Credit is not approved, you cannot open an RDSP. Even if you receive PWD Disability Assistance, you need the DTC to qualify for the RDSP.

Step 3

File income tax returns annually

The amount of grants and bonds you may get from the federal government depends on your income. To get the maximum grants and bonds, you must file your tax return annually. If you have a low income, there are community supports available to help you file your tax returns.

If you are approved for the Disability Tax Credit, it can usually be made retroactive. You may qualify for RDSP grants and bonds for previous years. You, your spouse, or your parents may be eligible for tax refunds.

Step 4

Choose your financial institution

Some financial institutions offer the RDSP, others do not. In BC, the following banks and credit unions support the RDSP:

Some banks or credit unions have different rules about taking money out of your RDSP. All bank or credit unions allow regular withdrawals that begin when you’re older, but only some allow one-time withdrawals, such as to buy a car or a house. See step 10 for more information about withdrawals.

Step 5

Choose your holder

The holder of your RDSP is the person who makes decisions about investments and withdrawals. In most cases, you will be the holder of your RDSP. If you need assistance managing your RDSP, your bank or credit union may require another person to be the holder of your RDSP. The holder will only manage the RDSP; you will still receive the money in the account.

Step 6

Open your RDSP

Now that you have qualified for the Disability Tax Credit, you are ready to open your RDSP. The next step is to schedule an appointment with your bank or credit union. When you go to your appointment, be sure to bring your Social Insurance Number and your photo ID.

You can also receive direct assistance with all aspects of opening an RDSP, including education sessions, one-on-one support and system navigation in your community.

Step 7

Invest your money

Now that you have opened your RDSP, you can start contributing and taking advantage of grants and bonds. These are based on your “family income.” If you are a single adult, this means your income. If you are married or in a common-law relationship, family income means the combined income of you and your spouse or common-law partner.

  • Bonds A full bond ($1,000 per year) is available if your family income is $30,450 or less. A partial bond is available if your family income is between $30,450 and $46,605

  • Grants If your family income is $93,208 or less, you may get matching grants of 300% and 200% (depending on the amount you deposit into your RDSP). If your family income is more than $93,208, then a matching grant of 100% (on first $1,000 per year) is available.

  • Endowment 150 The Endowment 150 grant offers eligible people with disabilities a one-time grant of $150 to help their Registered Disability Savings Plan (RDSP) grow. To learn more about this opportunity, click here.

Step 8

Reapply for the Disability Tax Credit as necessary

Even after you have applied for the Disability Tax Credit and your request forms are approved, you may have to do it again after some time. Your approval letter will tell you when you need to re-apply. This may be only one year later, or it might be longer, such as in 10 to 15 years.

Step 9

Withdraw your money

There are rules about when and how much you can withdraw from your RDSP. For example, if the government has contributed more money to your RDSP than you have, your RDSP is considered a “primarily government-assisted plan” and you are limited in how much money can be withdrawn in a year. If you have contributed more money than the government however, there are no annual maximum restrictions.

Whenever money is withdrawn from an RDSP, all or part of the grants and the bonds that have been in the RDSP for fewer than 10 years must be repaid to the Government. You must repay $3 for every $1 that is taken out, up to the total amount of grants and bonds paid into the RDSP in the last 10 years.

In other words – the RDSP is a long-term savings plan.

Further resources

  • RDSP Calculator The RDSP Calculator can help you project the estimated future value of an RDSP, and the approximate value of future withdrawal payments. Run various scenarios to see how it would affect the value of your RDSP.

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Editor, Spencer van Vloten: spencer@bcdisability.com

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