Why open an RDSP
An RDSP allows you to save money for the future, without paying tax on the earnings. Depending on your family income, the federal government may contribute as much as $90,000 to YOUR account. Your provincial government disability benefits will be unaffected. Really, you have nothing to lose and everything to gain…
Top 8 reasons to open an RDSP
- You choose where to invest your money. Almost all major Canadian financial institutions offer the RDSP.
- The government contributes generously! Depending on your family income, for every $1 saved, they will match up to $3. This is the Canada Savings Grant.
- If you have a low income and cannot invest yourself, the government will still save for you! For people living on a low-income (less than $31,120), the federal government will invest $1000 each year for 20 years! This is through the Canada Disability Savings Bond. People living on an income between $31,120 and $47,630 can still receive a partial bond.
- You can have money in an RDSP and still get your government benefits. (To find out how your province treats the RDSP, go to www.disabilitysavings.gc.ca.)
- Anyone can contribute to an individual’s RDSP: family, friends, neighbours, charities, foundations, and organizations. This gives people who want to help a way to do so! They just need the permission of the plan holder.
- You can spend RDSP withdrawals as you wish. You can decide where and when to spend the money.
- When you close an RDSP, your contributions and investment gained are yours.
- The RDSP is a powerful tool for long-term financial security. Someone saving $1,500 a year, for over 30 years, may find their RDSP worth nearly half a million dollars! Monthly payments out of the plan would start at about $850 and grow annually.
*Please Note: You can open an RDSP for anybody who has the Disability Tax Credit and is under the age of 60. It is better to open up an RDSP as soon as possible so that the beneficiary can maximize the government and personal contributions, have increased financial gain from compounded interest, and be able to withdraw funds from the plan at a younger age.
You are no longer eligible to receive government grants or bonds after the calendar year in which you turn 49, so it’s better to start the process as soon as you can!