The Registered Disability Savings Plan (RDSP) was established to help parents and others save for the long-term financial security of a disabled person (one who qualifies for the Disability Tax Credit).
The beneficiary of an RDSP can continue to receive federal and provincial disability benefits.
8 things to know about RDSPs
- The beneficiary is the person with the disability who will receive the money in the future.
- The plan holder is the person who opens and manages the RDSP. The beneficiary can also be the plan holder.
- There is no annual limit on contributions but the lifetime contribution limit for a beneficiary is $200,000.
- Contributions can be made to the plan until the beneficiary turns 59.
- Contributions are not tax deductible, but your savings grow tax free. There is no tax on the investment earnings, as long as they stay in the plan.
- Until age 49, the beneficiary may be eligible for government contributions to the RDSP under the:
- Canada Disability Savings Grant, and
- Canada Disability Savings Bond.
- RDSP savings can be held in a variety of investments, depending on where the plan is opened.
- The beneficiary must start taking regular payments from the plan by age 60.
Special to The Globe and Mail