What Is an RDSP?

A registered disability savings plan (RDSP) is a plan designed to help parents, family members, and others save for the long-term financial security of an individual who is eligible to receive the disability tax credit (DTC). The RDSP is set up as an arrangement between an issuer and a holder for the future benefit of a DTC-eligible beneficiary.

Contributions can be made to a plan by the beneficiary, by his or her parents or family members, and by other authorized supporters until the end of the year in which the beneficiary turns 59 years old. Contributions are not tax deductible. Earnings on contributions are tax-exempt while they stay in the plan.

Contributions that are made to an RDSP may be supplemented by payments from the Canada Disability Savings Program, which is administered by Employment and Social Development Canada (ESDC). The Government of Canada provides payments in the form of the Canada disability savings grant (grant) and Canada disability savings bond (bond) to an eligible beneficiary’s RDSP. The grant is an amount provided by the Government based on contributions and family income. The bond is money that the Government may deposit into the RDSPs of low-income or modest-income Canadians without them having to make contributions.

Payments out of the plan will begin by the end of the year in which the beneficiary turns 60 years of age, (or earlier, if the plan allows) and will continue to be paid at least once a year. When a payment is made from the plan, the grant and bond, investment income earned, and any rollover amounts are taxable income for the beneficiary.