Frequently Asked Questions

You can open an RDSP if you:

• Have been approved for the Disability Tax Credit (DTC) 
• Have a valid Social Insurance Number (SIN)
• Are 59 or younger
• Are a Canadian resident 

Applying for the DTC involves taking the T2201 (DTC) form to your medical practitioner to be completed and submitting it to the Canada Revenue Agency (CRA) for approval. If you’ve done this, you can find out if you’ve been approved in the following ways:

• You’ve received a Notice of Determination from the CRA that states if you’ve been approved, and if so, for which years.
• You can check your CRA My Account online, on the Disability Tax Credit section, under the Benefits & Credits tab.

An RDSP has a beneficiary and a holder. The following list summarizes all the holder scenarios:

• If the beneficiary is of majority age (over 18) and they are contractually competent(can manage their financial affairs independently), then the beneficiary can be the holder
• If the beneficiary is of minority age (under 18), then the legal parent or a legal representative will be the holder
• If the beneficiary is of majority age when the account is opened, but not contractually competent, then the holder should be a legal representative
• If the beneficiary is of minority age when the account was opened, but is now majority age and is contractually competent, the legal parents can continue to be the holders of the account if the beneficiary wishes, but the beneficiary can now also be the sole holder or they can be a joint holder with the parents.
• If the beneficiary is of majority age, but contractual competency is in doubt, then the account holder can be a Qualifying Family Member (QFM), which would include a legal parent, spouse or common law partner living with the beneficiary

For purposes of the RDSP, a primary caregiver refers to the person who is receiving the Canada Child Benefit (CCB) payments for a beneficiary who is a minor. The primary caregiver does not have to be the Holder, but will still have to be identified as the primary caregiver when opening the RDSP account. The government uses the primary caregiver’s information to verify the beneficiary’s DTC eligibility and residency, and verify family income to calculate the grant and bond entitlements. You can check if you are the primary caregiver in the following ways:

• If you receive your monthly CCB payments through a cheque in the mail, the primary caregiver will be the person the cheque is made out to.
• If you have a CRA My Account, you can check online either on the CCB Statement of Account under the Benefits and Credits tab or on the CCB Notice under the Mail tab. 
• The CRA sends an annual CCB Notice detailing your payments for the year. The primary caregiver will be the person the letter is addressed to. 

If there is shared custody of a beneficiary, the government will assess both incomes, and use the income that will result in the most advantageous grant and bond entitlements for the beneficiary.

The government contributes to your RDSP through the Canada Disability Savings Bond (CDSB) and the Canada Disability Savings Grant (CDSG). Contributions are made up until the calendar year you turn 49 and the amount you receive is calculated based on your family income.

• Canada Disability Savings Bond (CDSB)- You can receive up to $1000 per year and up to a maximum of $20,000 total through the CDSB. 

• Canada Disability Savings Grant (CDSG)- You can receive up to $3500 per year, up to a maximum of $70,000 total through the CDSG.

                                               Canada Disability Savings Grant

Family Income*                                                  Grant   Received

 Less than or equal to $106,717                    $3 for the first $500, up   to $1500
                                                                                   $2 for the next $1000, up to $2000
                                                                                   Total: max $3500 annually 

Above $106,717                                                   $1 for the first $1000,   up to $1000
                                                                                   Total: max $1000 annually

                                            Canada Disability Savings Bond

Family Income*                                                 Bond Received

Below   $34,863                                                  $1000 annually

Between   $34,863 and $53,359                  Partial bond
                                                                                 Calculated using the Formula:
                                                                                 $1000 - ($1000 x (A-B)/(C-B))
                                                                                 A- Family Income
                                                                                 B- Lower Threshold ($32,797)
                                                                                 C- Higher Threshold ($50,197)

Above $53,359                                                   No bond

*Adjusted for inflation annually

Anyone can contribute to your RDSP. There are no restrictions on who can contribute. It can be family, friends etc., whoever wants to help you out.

No personal contributions are required to receive the bond, they are only required to receive the grant. The government will evaluate the beneficiary’s income annually to determine if they meet the income threshold to receive the bond at all, and if so, how much they are eligible for. If it’s determined that the beneficiary is eligible for the bond, it will be automatically processed by the government at the end of February and then contributed to the account by the RDSP issuer up to 5 days later. 

Yes, up to the $200,000 lifetime contribution maximum. You won’t maximize the government contributions (CDSB & CDSG) if you contribute a $200,000 lump sum as they are evaluated annually. You can contribute until the calendar year you turn 59.

• Maximize your grants. In order to receive the maximum in grants you are entitled to, you’ll want to make sure that you are making annual contributions of at least $1000-$1500, depending on your family income ($1000 for a family income of more than $106,717 and $1500 for a family income of $106,717 or less). Since the grant is a government matching program, you would need to contribute the maximum amount required to be able to receive the full grant you are entitled to.

• Invest your RDSP. When you invest the funds in your RDSP, you’ll give the RDSP a chance to grow even more, beyond your and the government’s contributions. The amount of growth will depend on how you invest your funds. Corton Capital can help you find investments suitable to your goals that will grow your RDSP. 

If you’ve missed contributing for one or more years, or you contributed, but not enough to maximize the grant you’re entitled to, the government will carry-forward those amounts so you can still receive them in future years. You can use carry-forward amounts for up to a maximum of 10 retroactive years. In those following years, you can catch up on the unused grant entitlements and the government will match them at the rate you’re eligible for based on your income, up to $10,500 annually.

The government will also apply carry-forward amounts to years that you were eligible for the DTC but didn’t receive grants because you hadn’t opened an RDSP account yet. Additionally, you’ll receive any unused bonds up to a maximum of $11,000. For example, if your DTC eligibility began in 2015 but you only opened an RDSP in 2023, you would be entitled to receive the carry-forward amounts for 2015-2022. These entitlements will be paid out at the highest available matching rate first from the oldest to newest years, followed by any at lower rates.

Regular payments. The RDSP program is designed as a retirement savings plan for those with disability. Ideally, you should wait until you are 60 to start withdrawing funds. After 60 years of age, you can withdraw funds penalty free. You can also start withdrawing funds before 60 years of age, penalty free, if there have been at least 10 years since the last grant or bond was contributed by the government. Once the beneficiary reaches the age of 60, funds must be withdrawn at least annually and are received in payments called Lifetime Disability Assistance Payments (LDAPs). However, if you want to start withdrawing funds through LDAPs early, you may have to pay back some or all the grants and bonds you’ve received from the government (as per the 10 year/proportional repayment rule*), but you’ll keep your personal contributions and the interest that has accumulated over time. 

One-time payments. You can also make one-time withdrawals called Disability Assistance Payments (DAPs). How much you can withdraw depends on how much you’ve contributed to the RDSP. If you’ve contributed more than the government into your RDSP, after 60 years of age (or if at least 10 years have passed since the last grant or bond was contributed), there are no restrictions on how much you can withdraw. You could withdraw the full value of your RDSP in one DAP and close the RDSP. However, if your personal contributions are less than the government’s, then the DAP that you can request will be limited (cannot be more than the greater of the LDAP formula and 10% of the fair market value (FMV) of the RDSP’s assets at the beginning of the year). 

*The 10 year/proportional repayment rule states that you cannot withdraw funds from your RDSP penalty free if there have been government grants or bonds contributed in the last ten years. If you withdraw funds in this scenario, you’ll need to repay $3 for every $1 of the grants or bonds paid into your RDSP. 

Unlike other savings plans such as a RESP, where you can only spend the funds on education related expenses, there are no limitations on what you can spend your RDSP funds on. When you withdraw funds from your RDSP through a DAP or LDAP, you can choose to spend those funds on whatever you need or want.

You may need to pay tax on part of the money that you withdraw from your RDSP. You wont ever pay taxes on the amounts that you’ve personally contributed since they are considered after-tax dollars. However, if your withdrawals are below the amount the government has determined for that specific year (based on a calculation of the basic personal amount (BPA) and the disability amount (DA) tax credits), then you won’t need to pay any taxes. If the withdrawals are above the amount for that year, then your RDSP issuer will withhold the taxable amount from your payment and will report that taxable amount to the Canada Revenue Agency (CRA). The beneficiary will receive a tax form from the RDSP issuer and will need to include it when filing their taxes for that year. They may receive a tax refund from the CRA if the withheld amount was too high.

Most provinces consider the RDSP assets and income to be exempt and should not impact your disability and income assistance benefits. However, Quebec, New Brunswick and Prince Edward Island consider the assets in your RDSP to be exempt, but not income and set thresholds for the income you can receive from your RDSP before it will affect your disability assistance.

If your DTC eligibility expires or is revoked your RDSP can remain open however, you won’t be able to contribute, nor will you receive any grants or bonds from the government. You can withdraw funds, but if you are younger than 60, your withdrawals will be subject to penalties specific to RDSPs with no current DTC eligibility (similar to the standard early withdrawal penalties but with a few more conditions). It is best to reapply for the DTC as soon as possible to be able to restore your RDSP to its maximum growth potential.

If the beneficiary dies while the RDSP is open, the RDSP will need be closed by the end of the following calendar year and the funds paid out to the beneficiary’s estate. If grants and bonds were contributed within the previous 10 years, they will need to be repaid before the funds are distributed out to the estate. Taxes may also have to be paid on investment earnings and grant and bonds.

You need to be a resident of Canada to open an RDSP, make contributions and receive the grant and bond, but you don’t need to reside in Canada to receive payments (LDAPs and DAPs). However, if you choose to reside out of Canada while you are receiving your RDSP payments, you might want to consider the tax implications (you’ll need to pay taxes  in Canada and possibly the country you’re residing in) as well as whether your financial institution will release the funds to a Canadian account only, or to a foreign bank account.

If you have received a diagnosis from a medical doctor or nurse practitioner stating that you are not likely to survive more than 5 years due to your medical condition, you can convert your RDSP into an Specified Disability Savings Plan (SDSP). Once you’ve done this, you can withdraw up to $10,000 of taxable portions (government contributions, investment income and money rolled over from another account) of your RDSP annually (or more if your LDAP would result in a higher amount to be paid). The account can remain an SDSP until the beneficiary dies or it is reversed back in to an RDSP. If the SDSP continues beyond 5 years, there is no penalty. There are additional rules as to when an SDSP ceases, so further inquiry would be required before converting your RDSP into an SDSP.

While you won’t be able to receive the grants and bonds, there are still benefits to having an RDSP in your 50s. The assets in the account and the income (in most provinces) are considered exempt when it relates to other government assistance programs. Due to this, there is a benefit of having your funds in an RDSP so that your withdrawals won’t be clawed back by the government and affect your other assistance payments. Additionally, since you’ll still benefit from the tax-deferral and since your personal contributions are not taxed, it can be beneficial when considering your personal tax implications.