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Thursday, March 11, 2010 ..:: RDSP » RDSP Registered Disability Savings Plan - Features ::..   Login

RDSPadvisor.org - is maintained in co-operation with and in support of Lifetime Networks Ottawa for the benefit of Canadians with a disability.
  
Updated: 2009-10-20

Registered Disability Savings Plan (RDSP)

The Registered Disability Savings Plan, which was included in the federal budget this spring, is one of the most significant pieces of legislation affecting people with disabilities in recent history.  The RDSP represents a way for families to provide for the future financial security of their family members with disabilities. It will give families and people with disabilities more control in their lives.  As many as 745,000 Canadians with disabilities and their families could benefit.

The RDSP, is the result of an initiative advocated by a group of organizations led by the Vancouver-based Planned Lifetime Advocacy Network (PLAN) and its affiliates (Lifetime Networks Ottawa is one of them), and the hard work for the past five years of a dedicated team led by PLAN’s founder and President, Al Etmanski.

RDSP consists of three components: contributions by the family and friends, grants and bonds by the Canadian Federal Government.

Its salient features are:

Eligibility - the beneficiary

  • must qualify for the ‘disability tax credit’ or disability amount in the Income Tax Act and must be approved by Canada Revenue Agency (CRA) as being ‘markedly restricted’ in the activities of daily living in one or more of several ways.
  • be a Canadian resident
  • have a SIN number

Contributions

  • are not tax deductible
  • are permitted up to age 59 of the beneficiary
  • there is a lifetime maximum of $200,000
  • there is no annual limit
  • anybody can contribute: family members, friends, even the beneficiary
  • no refund of contributions to contributors
  • interest accrues tax-free

 RDSG - Registered Disability Savings Grants

  • grants are income sensitive
  • there is matching of contributions up to $1,500 at the rate of 100%-300% based on the family income
  • if the family income is less then $74,357 then the first $500 is matched at the rate of 300%, the next $1,000 @ 200%
  • for family income above $74,357 the first $1,000 is matched at the rate of 100%
  • the maximum amount of the grant in any year is $3,500
  • there is lifetime limit of $70,000
  • grants are given up to age 49
  • grants are locked in for 10 years

RDSB - Registered Disability Savings Bonds

  • bonds are income sensitive, the family income most be less then $36,174 to receive it in any given year
  • the maximum amount of the bond is $1,000 in any year
  • there is a lifetime limit of $20,000
  • if the family income is less then $20,833 the bond is $1,000
  • if the family income is between $20,833 and $36,174 the amount of the bond diminishes with increasing income until the upper limit of the scale, $36,174 is reached
  • bonds are paid up to age 49
  • bonds are locked in for 10 years

Withdrawals from the plan:

  • can be started any time after the age of 27
  • must start at age 60
  • once started must continue
  • the maximum annual payout is based on the life expectancy of the beneficiary subject to the available - not the 'locked in' - grants and bonds in that particular year
  • one-time payout are allowed under certain conditions, but must be specified at the time the plan is set up

Closing the plan:

  • it can be closed at any time
  • on closing he following amounts will be paid to the beneficiary or its estate
    • contributions and their eared interest
    • grants and bonds that have been in the plan for 10 years or more
  • 'locked-in' grants and bonds (portion that has been in the plan less then 10 years) will be returned to the government

Taxation:

  • capital contributions withdrawn from the RDSP will not be taxed, as the tax has already been paid on these sums
  • the following will be taxable in the hands of the beneficiary, as they are withdrawn:
    • Accumulated investment income on family's contributions
    • Government grants, bonds and accumulated investment income on them

Availability:

  • it is available from licensed financial institutions as a product 

Provincial impact:

 All provinces exempted (at least partially) RDSP when calculating provincial social benefits:

  • Full exemption: 
    Alberta, British Columbia, Ontario, Manitoba, Newfoundland-Labrador, Northwest Territories, Nova Scotia, Prince Edward Island, Saskatchewan and Yukon,
  • Partial exemption: 
    Quebec, New Brunswick

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LIFETIME NETWORKS OTTAWA thanks its major sponsors for their support of the disabled community!
The Ontario Trillium Foundation Our mission: Building healthy and vibrant communities throughout Ontario by strengthening the capacity of the voluntary sector, through investments in community-based initiatives. The Law Foundation of Ontario - Building a better foundation for justice in Ontario.HRSDC's New Horizons for Seniors program - through funding to non-profit organizations - helps to ensure that seniors can benefit from, and contribute to, the quality of life in their communities. Our Mission: The Community Foundation of Ottawa nurtures philanthropy and works with partners to have an enduring impact on communities. Paul's Boat Lines. The Best Way to See the Nation's Capital.
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