Understanding the Registered Disability Savings Plan (RDSP)
A Registered Disability Savings Plan (RDSP) is a powerful savings tool designed to help parents, caregivers, and others build long-term financial security for a person who is eligible for the Disability Tax Credit (DTC).
While contributions to an RDSP are not tax-deductible, the funds inside the plan grow tax-deferred until they’re withdrawn. Contributions can be made until December 31 of the year the beneficiary turns 59.
When funds are withdrawn, the original contributions are not taxable. However, the Canada Disability Savings Grant, Canada Disability Savings Bond, investment income, and any rollovers are taxable in the hands of the beneficiary when paid out.
Canada Disability Savings Grant (CDSG)
The Canada Disability Savings Grant is a matching contribution from the Government of Canada that helps boost savings within an RDSP.
Depending on the beneficiary’s family net income and the amount contributed, the government will match contributions at 300%, 200%, or 100%.
An RDSP can receive up to $3,500 in matching grants each year,
To a lifetime maximum of $70,000.
Grants are available on contributions made up to December 31 of the year the beneficiary turns 49.
Canada Disability Savings Bond (CDSB)
The Canada Disability Savings Bond is available for individuals and families with lower incomes. Unlike the grant, the bond does not require any personal contributions to receive government support.
For families with a net income under approximately $47,630 (based on 2019 thresholds), the Government of Canada may contribute up to $1,000 per year, to a lifetime maximum of $20,000.
Carry-Forward Provisions
If the beneficiary has been eligible for the RDSP in previous years but didn’t receive the full grant or bond, they may be able to carry forward unused entitlements for up to 10 years.
This means that before the end of the year you turn 49, you can catch up on missed years of government contributions — a valuable opportunity for families who start their RDSP later.
Contribution Limits
There is no annual limit on how much can be contributed to an RDSP. However, the lifetime contribution limit is $200,000 per beneficiary (including rollovers).
Contributions can be made until the end of the year the beneficiary turns 59.
Learn More
For more detailed information on RDSPs, visit the Government of Canada RDSP Guide
If you have questions about how an RDSP fits into your overall financial plan — or how to make the most of available grants and bonds — contact Shawna McCrea at Balance Financial. She can help you navigate the options and create a plan that supports long-term financial well-being for you and your loved ones.