Registered Disability Savings Plan (RDSP)
Registered Disability
Savings Plan
A Registered Disability Savings Plan (RDSP) from
Registered Disability Savings Plan
This registered savings plan from TD Direct Investing helps Canadians with disabilities and their families create greater financial security and achieve peace of mind for the future.
Your RDSP from TD Direct Investing —
- Allows for long-term savings with no annual contribution limit
- Creates savings through investments and tax-deferred growth
- Can receive government assistance — up to $70,000 in grants and, if eligible, up to $20,000 in bonds-paid to your account
- Provides a broader choice of investment options than other financial institutions to help your funds grow
- Provides flexible withdrawal options
For more information, or to open a Registered Disability Savings Account, please visit any TD Direct Investing location or TD Canada Trust branch, or speak with an Investment Representative at 1-800-465-5463 or TTY 1-866-966-6061.
Who is eligible for an RDSP?
Registered Disability Savings Plans (RDSPs) help Canadians with disabilities and their families save toward long-term financial security.
An RDSP beneficiary must —
- Be eligible to receive the Disability Tax Credit (DTC)
- Be a Canadian resident under the age of 60 at the time contributions are made
- Have a valid Social Insurance Number (SIN)
To be an RDSP Holder —
- The person with the disability can open an RDSP and be sole owner if they have reached the age of majority and are able to enter into a contract
- If the beneficiary is a minor, a qualified plan holder, who must have a valid SIN or Business Number (for public departments, agency or organization) but 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 beneficiary has reached or is above the age of majority but is not legally able to enter into a contract
- An individual or agency who is legally authorized to act on behalf of the beneficiary, can open the plan for the beneficiary.
- A qualified family member – legal parent, spouse or common-law partner - can open the plan for the beneficiary without legal authorization to act on behalf of the beneficiary. (New from Budget 2012 and effective until January 1st, 2017)
To be a contributor to an RDSP —
- A contributor can be the plan holder, as well as friends and family who have the written permission of the plan holder
What are your investment choices for your RDSP?
You can choose the security and steady income of TD Canada Trust GICs and term deposits, as well as the growth potential and flexibility of TD Mutual Funds.
Over and above our industry-leading GICs, term deposits and mutual funds, you can invest in a wide selection of qualified investments including —
- A wide range of mutual funds from other fund companies
- Fixed income investments and third party GICs
- Canadian, U.S. and foreign equities, including new issues
1Refers to the TD Direct Investing Disability Savings Plan.
Making Contributions
Contributions can be up to a lifetime limit of $200,000. Contributions are made with after-tax dollars and are not tax-deductible. As well —
- Deposits/contributions can be made up until the end of the year the beneficiary turns 59
- All contributions made to an RDSP are non-refundable
Withdrawals from an RDSP
- An RDSP withdrawal 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
Annual withdrawals
Annual withdrawals, or Lifetime Disability Assistance Payments (LDAPs), must begin by the end of the year in which the beneficiary turns 60. The client can start LDAP before the age of 60, but please be advised, once LDAP is started, client must take out LDAP payment at least annually. These annual payments will then continue for the life of the beneficiary.
The maximum annual payment amount is based on the beneficiary’s age and the fair market value of the plan.
One-time withdrawal
This form of withdrawal is known as Disability Assistance Payments (DAPs), and can be paid to the beneficiary any time after the RDSP is established.
- DAP payments per year will be limited to a maximum amount based on the client’s age and market value if the account is a Primarily Government Assisted Plan (Total Grant received in the account is greater than total contribution made by the client in any specific year)
How withdrawals are 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 the contribution component is not taxed.
These payments will not affect the plan holder’s 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.
1Conditions apply.
Government grants help savings grow
The RDSP is eligible to receive government assistance through two financial programs, which can 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 per RDSP beneficiary (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 $87,123* |
Family net income* over $87,123* |
|---|---|
| 300% on first $500 (maximum of $1,500) 200% on next $1,000 (maximum of $2,000) |
100% on first $1,000 (maximum of $1,000) |
| Example: A $1,500 contribution generates $3,500 CDSG |
Example: A $1,000 contribution generates $1,000 CDSG |
*Indexed to 2013 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 will 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 $25,356* |
Family net income* between $25,356* and $43,561* |
Family net income* over $43,561* |
|---|---|---|
| $1,000 per year | Portion of $1,000 based on a formula |
$0 |
*Indexed to 2011 income thresholds. Thresholds will be indexed to inflation annually. Table produced by: TD Waterhouse Canada Inc.
As you can see in the next chart, these programs can provide significant assistance in growing your savings every year.
| Family Net Income*($) | ||||
|---|---|---|---|---|
| Up to $25,356* |
$25,356* - $43,561* |
$43,561* - $87,123* |
Over $87,123* | |
| CDSG Matching Rates |
||||
| 300% on the first $500 |
$1,500 | $1,500 | $1,500 | - |
| 200% on the next $1,000 |
$2,000 | $2,000 | $2,000 | - |
| 100% on the first $1,000 |
– | – | – | $1,000 |
| CDSB | $1,000 | $500 | – | – |
| Total Assistance |
$4,500 | $4,000 | $3,500 | $1,000 |
*Indexed to 2013 income thresholds. Thresholds will be indexed to inflation annually. Table produced by: TD Waterhouse Canada Inc.
Canada Disability Savings Grant and Bond Carry Forward Entitlements
Since January 2011, a plan holder is allowed to claim unused grant and bond entitlements from the past 10 years (starting from 2008, the year Registered Disability Savings Plans became available).
In order to claim unused grant and bond entitlements, the beneficiary must be eligible to receive the grant and bond so that, at the time of the claim, the beneficiary must be aged 49 or under.
The amount of grant and bond that is eligible depends on the beneficiary’s family income in those years. The grant amount that is received also depends on how much is contributed to the RDSP. The matching rate is the same as the one that would have applied if the contribution had been made in the year in which the grant entitlement was earned. Matching rates on RDSP contributions are paid in descending order, with contributions using up any grant entitlements at the highest available matching rate first (for the oldest year of entitlement), followed by any grant entitlements at lower rates.
Grants and bonds are paid on unused entitlements, up to an annual maximum of:
$10,500 for grants; and
$11,000 for bonds.
Rollover from RSP, RIF or RPP to RDSP
To provide parents more flexibility in ensuring that their savings may be used to support a disabled individual when they are no longer able to support the child, budget 2010 allows a deceased individual's Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF) or Registered Pension Plan (RPP) proceeds to be transferred, on a tax-free basis, to the RDSP of a financially-dependent infirm child or grandchild.
If you are a parent or grandparent of a financially dependent child or grandchild with a disability, you can arrange for some or all of your retirement savings to be transferred tax-free to his or her Registered Disability Savings Plan (RDSP) when you pass away.
To be eligible for this measure, retirement savings must be in one of the following:
- a Registered Retirement Savings Plan (RRSP);
- a Registered Retirement Income Fund (RRIF); or
- a Registered Pension Plan (RPP)
Maximum Transfer Amount
The maximum transfer amount is $200,000; this amount is reduced by all contributions and rollover transfers that have previously been made to any RDSP.
The amount of money transferred into an RDSP forms part of the $200,000 lifetime contribution limit.
*IMPORTANT* The Government does not pay matching Canada Disability Savings Grants on the money you transfer.