A Registered Disability Savings Plan (RDSP) is a relatively new plan offered by the Canadian government that is intended to help parents and others to save money for people who are eligible for the Disability Tax Credit. The plan is designed for long-term savings and it’s best to keep any contributions in the plan for at least 10 years.
Contributions are not tax deductible, however the major advantage to an RDSP is that the government will pay matching grants of up to 300% depending on the beneficiary’s family income and the amount contributed. Over the beneficiary’s lifetime, they can receive up to $70,000 in grant money and they may also be eligible for Canada Disability Savings Bonds of up to $20,000.
The grants and bonds can be paid into the plan until December 31st of the year the beneficiary turns 49. For specific details on when the government grants or bonds would need to be repaid, check out this link.
In order to qualify as a beneficiary of an RDSP, you must be eligible for the Disability Tax Credit, have a valid SIN, be a Canadian resident, and be under the age of 60. Anyone can contribute to an RDSP as long as they have the permission of the plan holder.
There is no annual limit on amounts that can be contributed to an RDSP of a particular beneficiary. However, the overall lifetime limit for a particular beneficiary is $200,000. Contributions are permitted until the end of the year in which the beneficiary turns 59 years of age.
For more information on RDSPs, click on this link. RDSPs are a great way to help people with disabilities to become financially secure. Partnering with the government, you can ensure that you or your loved ones can achieve their financial goals.
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