Registered Disability Savings Plan (RDSP)
What is the RDSP?
The Registered Disability Savings Plan (RDSP) is a long-term savings plan for people with disabilities. It helps you save money for the future.
You or your family member may be able to get free money from the government in the form of matching grants and bonds. The amount of money depends on how much you or your family income is.
If you or your family member qualifies for the Disability Tax Credit (DTC), you can open an RDSP.
Why should I open an RDSP?
The RDSP can be a useful tool to help people with intellectual disabilities and their families save for the future. The earlier you open an RDSP, the more grants and bonds you may be able to get.
Here are some basics about the RDSP:
The RDSP is designed as a retirement plan, which means that the money usually stays in the account until you (or your family member) turns 60. While the money is in the account, it can be invested so it continues to make money and grow.
You can put in up to $200,000 of your own money, but anyone can put money into your RDSP for you. This means that you, your family, friends, or anyone else you give permission to can put money into your RDSP.
For every $1 that is put in your RDSP, the federal government could match with up to $3, depending on family income.
Your provincial/territorial disability funding or income assistance and benefits won’t be affected or reduced because of your RDSP or any money you take out of it. You get to keep all your benefits that you have today. This is an important part of the program.
Like an RRSP, an RDSP is also tax-deferred. This means that any money you have in the plan will keep growing without having to pay any taxes (money to the government) until you take money out.
Who Can Open an RDSP?
To open an RDSP, you need to:
Qualify for the Disability Tax Credit (DTC)
Have a valid Social Insurance Number (SIN)
Live in Canada
Be 59 years old or less
Parents of a child with a disability can even open an RDSP on their behalf.
How Does it Work?
Once your RDSP is open, you or others (like family or friends) can put money into it.
Then the government may add:
Canada Disability Savings Grants – up to $3,500 per year, depending on how much you put in and your family income (up to $70,000 total)
Canada Disability Savings Bonds – up to $1,000 per year, even if you don’t put in any of your own money (up to $20,000 total)
You can keep adding money until the end of the year you turn 59, and withdraw it anytime after age 60.
What Happens When You Take Money Out?
RDSPs are meant to help people save for the future.
Taking Money Out After Age 60
You can take money out of your RDSP anytime after you turn 60.
There are no penalties. This means you don’t have to pay back the government for the money they put in your RDSP.
This is the best time to take money out of your RDSP
Taking Money Out Before Age 60
You can take money out before you turn 60, but you may have to pay back government money because of the 10-Year Rule.
What is the 10-Year Rule?
For every $1 you take out, you may have to repay $3 in government grants and bonds.
For example: If you take out $1,000, you might have to repay $3,000 to the government.
How to Open an RDSP
Make sure you have the Disability Tax Credit (DTC)
You must have the DTC to open an RDSP. If you don’t have it, learn how to apply here, or contact one of our Navigators to help you apply.
Choose a financial Institution
Many banks and credit unions offer RDSPs. Ask if they offer RDSPs, and they will help you set one up.
Bring the right documents
You’ll usually need:
Social Insurance Number (SIN)
Government-issued ID
To learn more about how to open an RDSP, visit the Government of Canada website.
One of Inclusion Canada's Regional Navigators can help you understand your options and walk you through the steps. Contact one today.