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Registered Disability Savings Plan

Registered Disability Savings Plans (RDSPs) help Canadians with disabilities and their families save toward long-term financial security.

How to Apply

Visit any TD Canada Trust Branch or call 1-888-568-0951

 

A Registered Disability Savings Plan (RDSP) is a special program that helps Canadians with disabilities and their families save for long-term financial needs1 such as future medical and living costs. Like an RESP, investment income is tax-deferred and you may be eligible for government assistance.

 

What are the benefits of a TD Registered Disability Savings Plan?

 

Government assistance

To help your savings grow faster, the government provides grants and bonds. Learn about the different grants and bonds programs

 

Tax-deferred growth

While contributions to the RDSP are not eligible for a tax deduction, income earned grows on a tax-deferred basis until the funds are withdrawn. When withdrawn, the amount is taxed as income.

 

No annual contribution limit

Contributions can be up to a lifetime limit of $200,000. Plus, anyone can contribute with the written permission of the plan holder. Contributions can be made up until the end of the year the beneficiary turns 59.

 

Ability to make withdrawals

There are two ways a beneficiary of a Registered Disability Savings Plan (RDSP) can withdraw funds:

  • Annual withdrawals

    Annual withdrawals, or Lifetime Disability Assistance Payments (LDAPs), begin by the end of the year in which the beneficiary turns 60. These annual payments will then continue for the life of the beneficiary.

  • One-time withdrawal

    This form of withdrawal is known as a Disability Assistance Payments (DAPs)2, and can be paid to the beneficiary any time after the RDSP is established.

 
 

Explore your TD Registered Disability Savings Plan options today

Visit any TD Canada Trust Branch

Call 1-888-568-0951 to discuss your options

 

1Conditions apply.
2A DAP cannot be paid if it causes the value of the RDSP to fall below the total amount of grants and bonds that have been paid into the plan within the last 10-year period less any amount of grants and bonds paid in that period that has been repaid to the government. While withdrawals from the plan can be made at any time for the benefit of the beneficiary, it is very important to note that any grant or bond received within 10 years prior to a payment must be repaid, as the plan is intended to encourage long-term savings.

 

TD helps you find peace of mind for the future


 

A TD Direct Investing RDSP1

This registered savings plan helps Canadians with disabilities and their families create greater financial security.

Learn more

The highlights:

  • No annual contribution limit
  • Tax-deferred growth
  • Eligible to receive government assistance
  • Provides flexible withdrawal options
  • Self-directed accounts

 

Explore your TD Registered Disability Savings Plan today

Visit any TD Canada Trust Branch

call 1-888-568-0951 to book an appointment

 

1Refers to the TD Waterhouse Disability Savings Plan.

 

The government can help contribute to your savings

Your Registered Disability Savings Plan (RDSP) is eligible to receive government assistance through two financial programs, which can really help your savings grow faster.


 

Canada Disability Savings Grant (CDSG)

An RDSP is eligible for the Canada Disability Savings Grant (CDSG). Depending on your family’s net income and the amount contributed, there are benefits from matching grants of 100%, 200% or 300% — up to a lifetime limit of $70,000 (as shown in the chart below). Grants will be paid into an RDSP up to the end of the year in which the beneficiary turns 49.

 
Family net income * up to $83,088 Family net income * over $83,088
300% on first $500 (maximum of $1,500) 100% on first $1,000 (maximum of $1,000)
200% on next $1,000 (maximum of $2,000)
Example: A $1,500 contribution generates $3,500 CDSG Example: A $1,000 contribution generates $1,000 CDSG

* Indexed to 2011 income thresholds. Thresholds will be indexed to inflation annually. Table produced by: TD Waterhouse Canada Inc.


 

Canada Disability Savings Bond (CDSB)

The RDSP may also be eligible for the Canada Disability Savings Bond (CDSB) — which pays up to $1,000 per year — whether or not RDSP contributions are made. Bonds can be paid into an RDSP up to the end of the year in which the beneficiary turns 49, and up to a lifetime limit of $20,000. The income requirements are explained in the following chart.

 
Family net income * up to $24,183 Family net income * between $24,183 and $41,544 Family net income * over $41,544
$1,000 per year Portion of $1,000 based on a formula $0

* Indexed to 2011 income thresholds. Thresholds will be indexed to inflation annually. Table produced by: TD Waterhouse Canada Inc.


 

Explore your TD Registered Disability Savings Plan today

Visit any TD Canada Trust Branch

Call 1-888-568-0951 to discuss your options

 

Have a few questions?

We’ve provided answers to some of the most common questions people have about RDSPs.

 

Collapse What is a Registered Disability Savings Plan (RDSP)?

This is a savings plan that is intended to encourage parents and others to save for the long-term financial security of Canadians with a disability in a tax-deferred environment. The person with a disability must be eligible for the Disability Tax Credit.

 

Expand What is the Disability Tax Credit?

The disability amount, also known as the Disability Tax Credit, is a non-refundable tax credit that a person with a qualifying impairment can claim to reduce the amount of income tax they have to pay in a year.

 

Expand What are Canada Disability Savings Grants (CDSGs)?

As a way to encourage long-term savings through an RDSP, the Government of Canada created the Canada Disability Savings Grant (CDSG). Depending on the beneficiary’s family net income and the amount contributed, the Government of Canada will pay matching grants of 100, 200 or 300 per cent. An RDSP can receive a maximum of $3,500 in matching grants in one year, and up to $70,000 over the beneficiary’s lifetime. A grant can be paid into an RDSP on contributions made to the beneficiary’s RDSP by December 31 of the year the beneficiary turns 49 years of age.

 

Expand What are Canada Disability Savings Bonds (CDSBs)?

To assist low-income Canadians with disabilities, the government will pay up to $1,000 a year based on the beneficiary’s family income. CDSBs are not dependent on individual contributions. The lifetime bond limit is $20,000. A bond can be paid into an RDSP until the year in which the beneficiary turns 49 years of age.

 

Expand How is a family’s net income determined?

If the beneficiary is a minor, the family net income will be based on the combined net income of the parents or legal guardians. If the beneficiary has attained the age of 18, then the family net income will be based on the income level of the beneficiary (and their spouse or common-law partner).

 

Expand When are repayments of CDSGs and CDSBs required?

All grants and bonds paid into the plan in the 10 years preceding one of the following events must be repaid to the Government of Canada;

  • the RDSP is terminated (voluntary closure);
  • the plan is deregistered;
  • disability assistance payment is made from the plan;
  • the beneficiary ceases to be eligible for the disability amount;
  • the beneficiary dies.

 

Eligibility and Contributions

Expand Who is eligible to be a beneficiary?

Any individual who is a Canadian resident, with a valid Social Insurance Number and is under 60 years of age when contributions are made can become an RDSP beneficiary. The individual must also be eligible to receive the Disability Tax Credit. The beneficiary may only have one RDSP account.

 

Expand Who can be a plan holder?

The person with the disability can open an RDSP and be sole owner if they have reached the age of majority and can legally manage their finances. If the beneficiary is a minor or not legally competent, a qualified plan holder, who does not have to be a Canadian citizen, can be —

  • A legal parent, guardian, tutor or curator of the beneficiary
  • An individual who is legally authorized to act on behalf of the beneficiary
  • A public department, agency or organization that is legally authorized to act on behalf of the beneficiary

If the holder is not the beneficiary, the holder does not have to be a resident of Canada, but must have a valid Social Insurance Number (SIN) or Business Number (for public departments, agency or organization).

 

Expand Can an RDSP be opened by joint plan holders?

Yes. Both legal parents of the beneficiary can be holders under an RDSP. It is also possible for the parents and the beneficiary to be joint holders under the plan.

 

Expand Are there limits to the contributions I can make?

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.

 

Expand Are contributions tax-deductible?

Contributions to an RDSP are not tax-deductible. Contributions that are withdrawn are not to be included as income for the beneficiary when paid out of an RDSP. However, the Canada Disability Savings Grant, Canada Disability Savings Bond and investment income earned in the plan will be included in the beneficiary’s income for tax purposes when paid out of the RDSP.

 

Expand Who can make contributions to an RDSP?

Anyone can contribute to an RDSP with the written permission of the plan holder.
How to set up and establish a plan

 

Expand Who can set up an RDSP?

A legal parent, guardian, tutor, curator or an individual who is legally authorized to act on behalf of the beneficiary is eligible to set up an RDSP. A public department, agency or organization that is legally authorized to act on behalf of the beneficiary may also be named as an account holder. Additionally, a beneficiary who has reached the age of majority and is legally competent can open an RDSP and become a holder of the plan.

 

Expand How do you establish an RDSP?

To establish a TD Direct Investing RDSP3, a person who is qualified to be a holder of the plan must contact us.


 

Payment and taxation

Expand What types of withdrawals can be made from an RDSP?

There are several types of payments that can be made to the beneficiary of an RDSP. Lifetime Disability Assistance Payments (LDAP) are payments that, once they are started, must be paid at least annually until either the plan is terminated or the beneficiary has died.
The second type of payment is a Disability Assistance Payment (DAP). This form of payment can be paid to the beneficiary any time after the RDSP is established. It is important to talk with your advisor about this option, as it may entail repayment of government bonds and grants.

 

Expand How are withdrawals from an RDSP reported?

The Canada Disability Savings Grant, Canada Disability Savings Bond and investment income earned in the plan are included in the beneficiary’s income for tax purposes when paid out of the RDSP. RDSP issuers report the taxable portion of the payments from the plan in box 28 of a T4A slip and send a copy of the slip to the beneficiary or the beneficiary’s legal representative. The beneficiary includes this amount as income in their tax return for the year in which they receive it.

 

Expand How are withdrawals treated?

Amounts paid include a blend of taxable and non-taxable amounts. The CDSG, CDSB and income components are fully taxable to the beneficiary, while contributions are not taxed. These payments will not affect your eligibility for federal government benefits, such as the Canada Child Tax Benefit or the Goods and Services Tax Credit, nor will Old Age Security or Employment Insurance benefits be affected. Most provinces are participating in this program. However, provincial and territorial rules may differ. Please consult your provincial/territorial government for more information on the potential impact of RDSP assets and payments.


 

Cessation of disability

Expand What happens if the beneficiary no longer has a severe or prolonged impairment in mental or physical functions?

The RDSP must be closed no later than the end of the calendar year following the first full calendar year that the beneficiary is no longer considered mentally or physically impaired. Any funds remaining in the RDSP after any required repayment of bonds and grants will be paid to the beneficiary.

 

* Indexed to 2011 income thresholds. Thresholds will be indexed to inflation annually. Table produced by: TD Waterhouse Canada Inc.

1Conditions apply.
2A DAP cannot be paid if it causes the value of the RDSP to fall below the total amount of grants and bonds that have been paid into the plan within the last 10-year period less any amount of grants and bonds paid in that period that has been repaid to the government. While withdrawals from the plan can be made at any time for the benefit of the beneficiary, it is very important to note that any grant or bond received within 10 years prior to a payment must be repaid, as the plan is intended to encourage long-term savings.
3Refers to the TD Waterhouse Disability Savings Plan.