Registered Disability Savings Plans
People with disabilities face a distinct set of financial challenges throughout their lives. The Registered Disability Savings Plan (RDSP) is a long-term savings plan enabling individuals with disabilities to save for their future financial security. When you open an RDSP, you may also be eligible for grants and bonds to help with your long-term savings.
Reasons to open an RDSP
• The Canada Disability Savings Grant – Receive up to $70,000 from the federal government in matching contributions (lifetime maximum of $70,000). For the first $500 in contributions the federal government will contribute up to 300% in grant, if your family income is below $ 90,563, or 100% grant on the first $1,000, if your income exceeds $90,563.
• The Canada Disability Savings Bond – For people living on a low-income the federal government will invest up to $1,000 annually without the beneficiary making a single contribution, if the beneficiary’s family income is less than or equal to $26,364. People living on an income between $ 26,364 and $ 45,282 may still receive a partial bond.
• The overall lifetime contribution limit to a RDSP is $200,000.
• If you receive a lump sum amount, you can shelter your money in an RDSP. If you receive an inheritance, a legal settlement or a large severance payment, you may be able to put it into an RDSP for future use without affecting your federal or provincial disability benefits.
• Contributions to an RDSP are not tax deductible.
• Contributions can be made until the year in which the beneficiary turns 59.
• Contributions that are withdrawn are not included in income for the beneficiary. However, the Canada disability savings grant, the Canada disability savings bond, investment income earned in the plan, and rollover amounts are included in the beneficiary’s income for tax purposes when they are withdrawn from an RDSP.
• Anyone can contribute to an RDSP – family, friends, and even neighbours.
• Withdrawals can be used for any purpose, as long as it is for the benefit of the person with the disability, but the beneficiary must begin receiving payments from the plan by the end of the year he/she turns 60.
To qualify for an RDSP
• You must be eligible for the Disability Tax Credit
• Be a resident of Canada
• Be under 60 years of age
• Have a valid SIN
• And looking for a long-term savings plan
Speak to a Keybase Financial Group Advisor for more information.