By Dan McDonald PhD, Certified Professional Accountant, RDSP Workshop Facilitator, Parent

When faced with an investment proposal it is wise to remember that “if it seems too good to be true” then it probably is. And be wary. Very wary.

As an accountant I have always been very cautious of investment opportunities that seem too good to be true, but my experience is that the RDSP (Registered Disability Savings Plan) is an exception. When it was inaugurated near the end of 2008, it looked like a pretty good opportunity, and without hesitation I immediately set one up for my daughter. What I did not realize at the time was just how exceptionally generous it actually is. It was not until I started volunteering as a facilitator for the free RDSP workshops that Plan Institute offers that I began to appreciate its full benefits. I have continued that participation for four years now and am more and more enthusiastic as time goes by.

There is no downside–it is all good.

The RDSP is designed as a savings and investment plan, very similar to the Registered Retirement Income Fund (RRIF), to provide pension income that begins at age 60, but in my experience it is even better. The first and most obvious benefit is free government money. Subject to some very fair limitations such as family income, the government will contribute up to $90,000. Depending on family income, that $90,000 in free money requires investment from the beneficiary, or anyone one else, of only $30,000. That is the sweet spot but the beneficiary or family and friends can invest even more to a maximum of $200,000. At the other extreme, with minimum family income and zero investment by the beneficiary, family or friends , the government will contribute $20,000. Why pass up free money ranging from a minimum of $20,000 to a maximum of $90,000?

A huge benefit is that neither the assets in the investment pool nor the withdrawals from it by the beneficiary have any negative impact on either federal or provincial disability benefits. This is not true of alternative means for retirement income.

All of the reservations and complaints concerning the RDSP that I have encountered relate to failure to understand the plan, wishes that it was even more generous, difficulties in obtaining the Disability Tax Credit (the medical report accepted as qualifying for the RDSP) or disappointment in the specific investments that were chosen. None of these detract from the fact that the RDSP is hugely advantageous. If you do not feel confident about investing, one option you might want to consider is to invest in a balanced mutual fund.

My message to all is that if you or someone you know has a disability, I encourage you to establish  eligibility as soon as possible and set up an RDSP without delay.

Dan McDonald is a PLAN member who volunteers his time to Plan Institute as the RDSP Info Session Facilitator. If you wish to learn more about the RDSP and ask Dan any questions you may have, the next session is on October 27th, 2016 in Vancouver.