Making RDSP contributions
Anyone can contribute to an RDSP until the end of the year in which the beneficiary turns age 59. Here’s what you need to know:
- If you are not the plan holder, you must have written permission from the plan holder to contribute to an RDSP.
- You can contribute any amount you want each year to an RDSP. The lifetime contribution limit for a beneficiary is $200,000.
- RDSP contributions are not tax deductible.
- You can make lump-sum contributions or set up regular payments to be taken from your bank account: Pre-Authorized Debits.
Rolling over retirement funds into an RDSP
As of July 2011, if you are the parent or grandparent of a financially dependent infirm child or grandchild, you can arrange to have your retirement savings transferred — or rolled over — to their RDSP when you die. Here’s how it works:
- Your retirement savings must be in a Registered Retirement Savings Plan (RRSP),Registered Retirement Income Fund (RRIF) or Registered Pension Plan (RPP).
- The government will not pay matching grants on the contribution.
- Any money transferred will be part of the beneficiary’s $200,000 lifetime contribution limit. Example: If the RDSP already has contributions of $50,000, the maximum that can be rolled over when you die is $150,000.
Learn more about the rules for this type of transfer.
Transferring to another RDSP
Funds in 1 RDSP can be transferred to another RDSP as long as both plans have the same beneficiary. For instance, a beneficiary about to reach the age of majority may want to open up a new RDSP at a different financial institution. Here’s how it works:
- All plan holders of the current RDSP must agree to the transfer.
- All funds in the current RDSP must be transferred to the new RDSP.
- The transfer must be completed within 120 days after the new RDSP contract is signed. If the funds are not transferred on time, the new RDSP will be considered invalid.
- Transfer fees may apply. These may vary depending on the financial institutions involved.
- Transfers to another RDSP are not considered a new contribution, so they won’t affect the lifetime contribution amount of $200,000.