RDSP (Registered Disability Savings Plan)

What Is an RDSP?

A Registered Disability Savings Plan (RDSP) is a long-term savings account for Canadians with disabilities. It’s designed to help individuals and their families build financial security for the future—with tax-deferred growth and significant government contributions.

It’s one of the most generous savings programs in Canada for eligible individuals.

Who Is Eligible?

To qualify for an RDSP, the beneficiary must:

• Be a Canadian resident
• Have a valid Social Insurance Number (SIN)
• Be under age 60 when the plan is opened
• Be eligible for the Disability Tax Credit (DTC)

Only one RDSP can be set up per person, but anyone can contribute with the written consent of the account holder.

How Does an RDSP Work?

• Contributions are not tax-deductible, but they grow tax-free inside the plan.
• The government offers:
  
  • Canada Disability Savings Grant (CDSG): Up to $3,500 per year
  • Canada Disability Savings Bond (CDSB): Up to $1,000 per year for low-income families
• Government contributions can continue until the end of the year the beneficiary turns 49.
  

The lifetime contribution limit is $200,000, and funds must be withdrawn by the end of the year the beneficiary turns 60.

Withdrawals and Taxation

• Withdrawals include both contributions and grants/growth.
• Contributions are not taxed when withdrawn.
• Grants, bonds, and investment growth are taxable in the beneficiary’s hands—usually at a low rate.
• Early withdrawals may trigger repayment of government funds if taken out before certain time limits (typically 10 years after last grant/bond was received).
  

Why It Matters

• Helps individuals with disabilities save without impacting eligibility for federal and provincial income-tested benefits.
• Enables long-term financial planning for those with lifelong support needs.
• Significant government matching makes early participation especially valuable.
  

Key Takeaways

• An RDSP is a powerful tool to build long-term savings for people with disabilities.
• It offers tax-deferred growth and generous government contributions.
• Eligibility is tied to the Disability Tax Credit (DTC).
• Funds can be withdrawn later in life, with some rules around timing and repayment.

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