Registered Disability Savings Plan
This is an outstanding program which everyone should take advantage of. It is now available, with the Bank of Montreal being the first major bank to offer the plan (The Royal Bank is now onboard as well). It works similar to an RESP whereby a contributor adds after tax money to this registered plan, the government adds "free money" and it all accumulates tax free. There is something for everyone here. Families with modest incomes will qualify for a savings bond with no matching contributions. Families with higher incomes will enjoy matching grants within certain limits.
Once this program is widely implemented there should be no excuse not to have a plan set up. Depending on family income the government will add funds through one or both of the following programs.
Canada Disability Savings Grant
When annual net income is equal to or less than $74,357 the grant will contribute:
$3 for every $1 contributed on the first $500.
$2 for every $1 contributed on the next $1,000.
When annual net income is over $74,357, the grant will contribute:
$1 for every $1 contributed up to $1,000.
The Grant can be received up to a maximum of $70,000 over a person’s lifetime and only until the beneficiary turns 50 years of age.
Canada Disability Savings Bond
When annual net income is $20,833 or less, the Canada Disability Savings Bond will provide $1,000 per year without any personal contribution. The Bond is pro-rated if your income is between $20,883 and $37,178.
The Bond was created to make the RDSP accessible to persons with disabilities whose family and friends are not in a position to make contributions. The Bond can be received up to a maximum of $20,000 over a person’s lifetime and only until the beneficiary turns 50 years of age.
More information
I'm not going to explain the plan in detail as there are other sites which do a better job. Please check out the following links:
How can I maximize the benefit when my child turns 18?
The excerpt from an email from the Canada Disability Savings Program refers:
- "If the beneficiary is under the age of 18 then the "family net income" is that of the parents'. If the beneficiary is over the age of 18 then the "family net income" is that of the beneficiary and his/her spouse or common-law partner. In a situation where the beneficiary is not contractually competent and is living with his parents, the "family net income" used is that of the beneficiary. The income is determined for the year that ended on December 31 of the second preceding year. (Example: Contribution made in 2009 - net income based on the taxable year of 2007.) To summarize, to ensure the beneficiary receives the maximum entitled grant and bond it is in his best interest to file taxes for the past two year (even though his income may be low or even non-existent) so that we may confirm total family net income with Canada Revenue Agency and award the grant and bond accordingly."