RDSPs

Registered Disability Savings Plan

This is an outstanding program which everyone should take advantage of. It is now widely available at many of the major financial institutions.

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.

BC has exempted RDSP payouts from clawing back Persons with Disabilities (PWD) benefits further increasing the desirability of this plan.

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 family net income is equal to or less than $89,401 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 $89,401, 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 $26,021 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 $26,021 and $44,701.

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.

Would you like a $150 gift to kickstart your RDSP?

If you are in receipt of provincial income assistance, you may be eligible for a one time gift of $150. Refer to Endowment 150 for more information.

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?

To ensure the beneficiary receives the maximum entitled grant and bond he/she should file taxes for the past two years

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/her parents, the “family net income” used is that of the beneficiary.  The income that will determine the grant and bond is based on the income tax return from the second preceding year.  (Example:  Contribution made in 2009 – net income based on the taxable year of 2007.) In summary, to ensure the beneficiary receives the maximum entitled grant and bond he/she should file taxes for the past two years (even though his income may be low or even non-existent) so that the grant and bond will be given accordingly.”