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Search ![DTC & RDSP](https://www.jkassetmanagement.ca/hubfs/DTC%20%26%20RDSP.jpg "DTC & RDSP") # **The Registered Disability Savings Plan (RDSP)** The RDSP is a long-term savings plan introduced by the Government of Canada in 2008. Savings grow tax-sheltered, and the government adds money when you qualify. #### **Key facts** - Lifetime contribution limit: $200,000 - Lifetime Canada Disability Savings Grant: $70,000 - Lifetime Canada Disability Savings Bond: $20,000 - Grants and bonds are paid up to the end of the year the beneficiary turns 49 - Grants and bonds are held for 10 years (the holdback) #### **Who can open an RDSP** - The beneficiary must be approved for the Disability Tax Credit. - They must be a Canadian resident with a Social Insurance Number. - They must be 59 or younger on December 31 of the year the plan is opened. The holder manages the plan. It can be the beneficiary once they reach the age of majority. For a minor, or an adult who cannot enter into a contract, a parent, legal representative or public department can be the holder. Anyone can contribute with the holder’s permission. **Why start early** Grants and bonds stop at the end of the year the beneficiary turns 49, so every year of eligibility counts. Missed years are not lost: up to 10 years of unused entitlement can be carried forward, with up to $10,500 of grant and $11,000 of bond paid in one year while catching up. To receive either, the beneficiary must file income tax returns, even if there is no income, for the prior two years and for every year the plan is open. **What the government adds in 2026** Amounts depend on the beneficiary’s adjusted family net income. Up to the year they turn 18, it is the family’s income. From the year they turn 19, it is their own income plus a spouse’s or partner’s. #### Grant (CDSG) - Family net income of $117,045 or less: $3 for each $1 on the first $500, then $2 for each $1 on the next $1,000. This is up to $3,500 a year for a $1,500 contribution. - Family net income over $117,045: $1 for each $1 on the first $1,000, up to $1,000 a year. #### Bond (CDSB) - $38,237 or less: the full $1,000 a year. No contribution is needed. - $38,237 to $58,523: a reduced bond that shrinks as income rises. - $58,523 or more: no bond. These are 2026 thresholds, based on 2024 family net income and indexed each year. Source: Employment and Social Development Canada. **Withdrawals, taxes and the 10-year rule** Two kinds of payments: - A **Disability Assistance Payment** (**DAP**) is a lump sum paid to the beneficiary or their estate, with no limits on how it is spent. There is a cap on the amount. - A **Lifetime Disability Assistance Payment** (**LDAP**) is a series of regular payments. They must start by the end of the year the beneficiary turns 60, then continue at least yearly. The yearly limit is the plan’s value divided by 3 plus (life expectancy minus age). #### **Common questions about the RDSP** **Can my family and friends contribute to the RDSP?** Yes, with the holder’s written permission. Contributions are not tax-deductible, and only contributions made by the end of the year the beneficiary turns 49 qualify for grants. **Will an RDSP affect my provincial or federal benefits?** Payments from an RDSP do not reduce Old Age Security, the Guaranteed Income Supplement, CPP or the GST/HST credit. They are also not counted by AISH in Alberta. **I’m over 49. Is it still worth opening one?** You can open an RDSP until the end of the year you turn 59, and contribute to it until then. Grants and bonds are only paid up to the year you turn 49. Growth is still tax-sheltered, so it can suit some families. It depends on your situation. **Can I change from one RDSP provider to another?** Yes. Direct transfers to another RDSP for the same beneficiary are allowed. **Tax on withdrawals**: Your own contributions come out tax-free. Grants, bonds and investment growth are taxed as income to the beneficiary when paid out. Payments do not reduce income-tested federal benefits such as Old Age Security, the Guaranteed Income Supplement, CPP or the GST/HST credit. They are also not counted by provincial programs such as AISH in Alberta. **The 10-year holdback**: If money is withdrawn within 10 years of receiving a grant or bond, the government takes back $3 for every $1 withdrawn, up to the amount received in that period. Plan withdrawals around it. #### Special situations: - **Short life expectancy**: If a doctor or nurse practitioner certifies life expectancy at five years or less, the plan can become a Specialized Disability Savings Plan. It allows yearly withdrawals of up to $10,000 of taxable savings, plus a share of contributions, without repaying grants and bonds from the last 10 years. - **Death of the beneficiary**: The plan closes, grants and bonds from the last 10 years are repaid, and the rest goes to the estate and is taxed on the final return. ``` Contact UsContact JK Asset Management with your questions or requests. 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