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FAQ's Regarding RDSP's
FAQ's Regarding RDSP's
The holder opens the RDSP and names the beneficiary on the RDSP. The beneficiary is the individual who will receive the funds from the RDSP in the future.
The holder must be age of majority and have a valid SIN or business number.
If the beneficiary is under the age of majority, the holder must be:
- a legal parent of the beneficiary
- the beneficiary's legal representative
If the beneficiary is an adult and:
- the beneficiary is contractually competent to enter into a contract, the beneficiary must also be the holder.
- the beneficiary is not competent to enter into a contract, the holder must be the legal representative of the beneficiary.*
- if the contractual competency of the beneficiary is in doubt and no legal representative has been appointed, the holder can be a qualifying family member.*
*conditions apply
To qualify, the beneficiary must:
- Be eligible for the Disability Tax Credit (DTC)
- Have a valid Social Insurance Number
- Be a Canadian resident
- Be under 60 years of age
An RDSP can have only one beneficiary and a beneficiary can only have one RDSP. Once the beneficiary is named on the plan, the beneficiary cannot be changed.
Anyone can make a contribution to an RDSP with written consent of the plan holder.
No, an RDSP does not affect eligibility for federal benefits such as Canada Child Benefit (CCB), GST/HST Credit, Old Age Security (OAS), or Employment Insurance (EI).
There is no annual contribution limit, however, there is a lifetime contribution of $200,000.
Withdrawal of contributions are not included as income to the beneficiary when paid out of an RDSP. However, the Canada Disability Savings Grant, Canada Disability Savings Bond, investment income earned in the plan, and the proceeds from rollovers are included in the beneficiary’s income for tax purposes when paid out of the RDSP.
The government of Canada offers two types of incentives for RDSP's:
Canada Disability Savings Grant (CDSG) is a matching grant of 100%, 200% or 300%, depending on the beneficiary's net family income and the amount contributed to an RDSP, up to a maximum of $3,500 CDSG annually.
Canada Disability Savings Bond (CDSB) is an amount paid by the federal government into the RDSP's of low to modest income families. The government will pay up to $1,000 per year, and the lifetime maximum is $20,000.
For more information on these two incentives, click here.