If you have a Registered Disability Savings Plan (RDSP), know somebody who does, or are thinking about opening one, you may already be familiar with the contribution limits for the RDSP.
Every RDSP can receive up to $200,000 in personal contributions, $70,000 in grants, $20,000 in bonds, and any amount of growth (interest, dividends, capital gains) within the account.
What you may not have realized is that if a withdrawal is made from the RDSP that these limits do not reset. Once a deposit is made into the account, either personal or government, this reduces the total amount that can be deposited in the future.
Let’s break it down with some examples:
- You deposit $100,000 into an RDSP through personal contributions. Then you decide that you would like to withdraw $50,000. Even though your RDSP now has only $50,000 of personal contributions, you will still only be able to deposit another $100,000. This is because you have already used up half of that contribution room.
- You receive $10,000 in grants and $5,000 in bonds. Then you make an early withdrawal within 10 years of receiving those government funds of $5,000, causing a repayment of the full grant and bond amount. You are now only able to receive $60,000 in grants and $15,000 in bonds in the future
There are currently no exceptions to these rules and we encourage everyone to consult with their financial professional before making any withdrawals from their RDSP.
If you would like to learn more about the rules of the RDSP, how withdrawals work, or how this may impact your personal situation, we encourage you to call our free Disability Planning Helpline at 1-844-311-7526 or email in at firstname.lastname@example.org.
More resources and information about the RDSP:
- For further clarification of this rule, outlined by Employment and Social Development Canada (ESDC), see: ‘4.0 Impact on Limits’
- Find out how much your RDSP could grow to – try our RDSP Calculator
- Learn more about the RDSP using our RDSP Tutorial
- Attend one of our free RDSP webinars
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