Registered disability savings plans
Helping with long-term financial security The Registered disability savings plan (RDSP) is a powerful way for people with disabilities (or parents and others) to save for long-term financial security.
Who benefits from an RDSP?
Generally, any resident of Canada under the age of 60 who is eligible for the disability tax credit (DTC) can be the beneficiary of an RDSP.
Who can open an RDSP (plan holder)?
• The beneficiary
In the case the beneficiary is a minor or incapacitated:
• A legal parent of the beneficiary
• A guardian, tutor, curator or other individual legally authorized to act on behalf of the beneficiary
• An adult beneficiary’s spouse or common-law partner
• A public department, agency or institution legally authorized to act on behalf of the beneficiary
The Canada disability savings grant (CDSG) and the Canada disability savings bond (CDSB)
The Government of Canada will contribute via the CDSG and/or the CDSB into an RDSP based on the beneficiary's family income and contribution amount.
Why it's a powerful way to save
• Assets within an RDSP can be invested tax-free until the beneficiary reaches 59 years of age
• Plan holder can contribute up to $200,000
• The Canada disability savings grant (CDSG)
• The Canada disability savings bond (CDSB)
• Unused contribution room can be carried forward
• Investment income from a beneficiary’s Registered educations savings plan (RESP) can potentially be transferred into an RDSP
• Parents or grandparents can potentially transfer retirement savings tax-free into an RDSP when they pass away
Receiving payments from an RDSP
Under certain conditions, Disability assistance Payments (DAPs) can be requested for a beneficiary or his/her estate.
Lifetime disability assistance payments (LDAPs) are a type of DAP which, once started, is payable at least annual until the beneficiary’s death or the plan is terminated.
The portion of DAPs that is from CDSG, CDSB and Investment growth is taxable to the beneficiary or his/her estate. The portion of DAPs coming from personal contributions is non-taxable. Beneficiaries must wait 10 years after receiving the last CDSG and CDSB before making a withdrawal or face a CDSG and CDSB claw back.
Annual Government of Canada contributions
Net family income thresholds (2018)
$30,450 or less (See scenario 1)
Between $30,450 and $46,605
Between $46,605 and $93,208
Greater than $93,208 (See scenario 2)
Annual CDSG ($70,000 lifetime maximum)
3-to-1 match on the first $500 of contributions
2-to-1 match on the next $1,000 of contributions
1-to-1 match on the first $1,000 of contributions
Annual CDSB ($20,000 lifetime maximum)
Calculated based on family income
Total annual assistance
Between $3,500 and $4,500
Potential accumulation of wealth in an RDSP
Assumptions: No growth on assets, beneficiary’s family income is less than $30,450, $1,500 annual contributions.
Year: 2, 3, 4, 5… 20
Potential accumulation of wealth in an RDSP for higher income families
Assumptions: No growth on assets, beneficiary’s family income is greater than $93,208, $1,000 annual contributions.
Year: 5, 10, 15… 60
For more information about the RDSP, please contact your MD Advisor1 or visit www.Canada.ca
1 MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private
Investment Counsel Portfolio Manager.
The information contained in this document is not intended to offer foreign or domestic taxation, legal, accounting or similar professional advice, nor is it intended to replace the advice of independent tax, accounting or legal professionals.
Incorporation guidance is limited to asset allocation and integrating corporate entities into financial plans and wealth strategies. Any tax related information is applicable to Canadian residents only and is in accordance with current Canadian tax law including judicial and administrative interpretation. The information and strategies presented here may not be suitable for U.S. persons (citizens, residents or green card holders) or non-residents of Canada, or for situations involving such individuals. Employees of the MD Group of Companies are not authorized to make any determination of a client’s U.S. status or tax filing obligations, whether foreign or domestic. The MD ExO® service provides financial products and guidance to clients, delivered through the MD Group of Companies (MD Financial Management Inc., MD Management Limited, MD Private Trust Company, MD Life Insurance Company and MD Insurance Agency Limited). For a detailed list of these companies, visit md.ca. MD Financial Management provides financial products and services, the MD Family of Funds and investment counselling services through the MD Group of Companies.