Why Open an RDSP?

The Registered Disability Savings Plan (RDSP) was established by the federal government to help parents and others save for the long-term financial security of a person with a disability (one who qualifies for the Disability Tax Credit).

A big advantage of RDSPs is that, like RRSPs, they allow your money to grow tax-free. Plus, the beneficiary of the account will not pay tax on earnings until the funds are withdrawn. That could add up to a lot of savings.

As the beneficiary of an RDSP, you can access your money two ways — annual payments or periodic lump-sum withdrawals.

Also, if you save your money in an RDSP, you’re still eligible for other programs. Income payments from RDSPs don’t affect Old Age Security, Guaranteed Income Supplement and the Canada Pension Plan, and in most provinces and territories, you’ll still qualify for existing provincial social assistance programs.

The total lifetime contribution for each beneficiary is $200,000, with no annual contribution limits.

If a parent or grandparent passes away and has a financially dependent child or grandchild, they can transfer up to $200,000 of their RRSP/RRIF or RPP to the dependent’s RDSP on a tax-deferred basis.