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Complete Guide to the Registered Disability Savings Plan (RDSP)

Complete Guide to the Registered Disability Savings Plan (RDSP)

The Registered Disability Savings Plan, or RDSP, is a tax-sheltered investment account that allows parents or guardians of disabled children to save for their child’s future. The individual opening the account is known as the planholder, while the disabled person is the beneficiary. The beneficiary can also act as the planholder.

In this article, I’ll cover everything you need to know before opening an RDSP and tell you where you can go to open an account and begin contributing.

Who is Eligible for the RDSP?

To qualify as a beneficiary for an RDSP, an individual must meet each of the following criteria:

  • Must be eligible for the disability tax credit (DTC);
  • Be a resident of Canada at the time the plan is opened;
  • Have a valid SIN; and
  • Be under the age of 60

How do RDSP Contributions Work?

The lifetime contribution limit into an RDSP is $200,000. There is no annual limit, but any contributions made during the life of the plan will reduce the remaining lifetime limit. Contributions can be made until the end of the year in which the beneficiary turns 59. As opposed to other components of the RDSP, contributions made into the plan are not taxed upon withdrawal.

RDSP Transfers

As I mentioned earlier, if the planholder wishes, they can transfer the full balance of an RDSP to an account at another institution. Only the full balance can be transferred over, and the old plan must be closed immediately after the funds are transferred. All planholders must consent to the transfer. Income funds from an RDSP transfer are not eligible for any grants.

RDSP Rollovers

A parent or grandparent of a dependent child/grandchild with an eligible disability, can rollover their retirement savings plan (RRSP), into the child’s RDSP when they pass away. The maximum amount is $200,000, and funds rolled over into an RDSP are not eligible for any bonds or grants.

How are RDSPs Taxed?

Similar to a Registered Education Savings Plan (RESP), contributions to an RDSP are not tax-deductible, and are not taxed upon withdrawal. Not only that, but all monies in the account remain tax-sheltered.

When a disability assistance payment (DAP) is made to the beneficiary from the RDSP, it is taxable in the hands of the beneficiary and is added to their income in the year that the payment was received.

The DAP does not include account contributions, rather it’s comprised of any amount that was rolled over, any eligible grants or bonds, and any investment income that was earned.

I should note that while the payments are added to a beneficiaries income for taxation purposes, the amount is not used when the government is calculating a number of benefits, including the GST credit and the Canada Child Benefit (CCB).

Available RDSP Grants and Bonds

Tax-sheltered growth is not the only reason for eligible Canadians to take advantage of the registered disability savings plan. The government provides additional support by offering both a grant and a bond to beneficiaries of an RDSP. Let’s take a closer look at these two incentives.

Canada Disability Savings Grant (CDSG)

The Canada Disability Savings Grant will match as much as 300% of the contribution into an RDSP, with a lifetime grant of up to $70,000. To be eligible for the CDSG, you must be eligible for the Disability Tax Credit and under 49 years of age.

If the family income is less than $93,208 then the beneficiary will receive 300% matched on the first $500 contributed and 200% on the next $1,000. So if the beneficiary’s family were to contribute $1,500 a year then the government would include a grant of $3,500 that same year. A beneficiary with a family income above $93,208 can receive a 100% match on the first $1,000.

Canada Disability Savings Bond (CDSB)

The Canada Disability Savings Bond is an additional deposit available from the government for those with a family income of less than $46,605. Other than the low-income considerations, the CDSB has the same requirements as the Canada Disability Savings Grant.

Family incomes of less than $30,450 are eligible for the full annual bond amount of $1,000, with a total lifetime limit of $20,000. The bond reduces as incomes increase. For example, for family incomes between $30,450 and $46,650, beneficiaries receive a percentage of the $1000 bond, based on a formula defined in the Canada Disability Savings Act.

Unused grant and bond amounts (up to 10 years worth) can be carried forward to future years, providing the beneficiary met the other requirements in those years and is under the age of 49.

RDSP Features & Benefits at a Glance

Now that we’ve taken a detailed look at the registered disability savings plan, here’s a list of some of the main features you’ll want to remember:

  • Tax-sheltered savings account for eligible disabled Canadians
  • Lifetime contribution limit of $200,000
  • Contributions can be made until age 59
  • Available Canada Disability Savings Grant (CDSG), up to 300% match
  • Canada Disability Savings Bond (CDSB) available, up to $1000 per year
  • Disability Assistance Payments (DAP) taxable in the hands of the beneficiary
  • RRSP funds can be rolled over from a deceased parent or grandparent
  • Anyone can contribute – family members, friends.
  • Contributions are not taxed upon withdrawal
  • The beneficiary must begin receiving payments at age 60
  • RDSPs are available at all major Canadian Banks

Where can I Open an RDSP?

RDSPs are available through all of the major banks in Canada. Keep in mind, however, that a beneficiary can only hold one RDSP account at any given time. If the planholder wishes to change financial institutions, they can choose to transfer the RDSP to another bank at any time.

If you know someone who collects the Disability Tax Credit but may not be aware of the Registered Disability Savings Plan, please let them or their family members know about this great tax-sheltered investment plan.


  1. Ryan Rohloff

    You say that the plan is for parents or guardians, while it is a great tools for parents to save for the childrens future it is also for adults with a disability to save for themselves. A parent or guardian can open the plan on behalf of a dependent, but any Canadian of legal age can open the plan and make contributions to the plan for their own benefit in the future.
    As a financial planner with a disability, I have not only helped other opens plans, but have opened my own as well. I would be happy to answer any questions anyone might have about the plan.

    • Dan Scaber

      Hi Ryan.
      I myself was a financial planner till I became disabled with a condition call Bi-polor. I through this condition have met multitudes of people that likely qulaify for this bennit but would need quidance and encouragement to start one.These people are largely on aish. Would you know a supplier of a RDSP That may pay for my expenses of bringing these people in. I am on a total disabily claim with a lapsed licence and have a
      hard time finding a sponsering company though my Doctor says I may able to work. I dont want to jeprodise my disabilty claim.
      Thanks Dan

      • Brian Poncelet, CFP

        Hi Dan,

        Talk to us! Since we are financial advisors we can help.

        Our web site is

  2. r&d tax credit

    Sounds like a great plan, especially if it allows people to save for themselves should they have a disability. A lot of people don’t really know the best way to put money aside and keep it save for people who have a disability.

  3. Brian Poncelet, CFP

    If on is over 18 you can turn $20,000 into over $164,000 in twenty years using Government and corporate bonds!

  4. Steve Robbins

    Many canadians are unaware that the canadian government offers tax benefits and grants for anyone who has a physical or mental disability. Unfortunately collecting these benefits can be complicated and stressful. At the Canadian Disability Corporation they simplify the process to make sure you obtain every dollar possible from the CRA. On top of this, they will also ensure you’re applied to other programs available to people with disabilities such as the Registered Disability Savings Plan (RDSP).

  5. Kevin

    I wish everyone could know how Canadian Disability Corp. CDC has saved me.

    Sometimes you don’t believe good things can happen. I was wrong; I had never seen a company do so much for me for so little.

    Thank you again and again.

    I recommend there secured website,

  6. Randd tax

    . One question though- does this benefit only apply if you are resident in Canada ?
    Also, can non-Canadian tax-payers contribute to the scheme?

  7. Disability Tax Service

    In order to qualify for the Registered Disability Savings Plan (RDSP) you must first qualify for the Disability Tax Credit (DTC) first.

  8. Kate

    Can a RRIF also be rolled over to a disabled child’s RDSP upon the death of the RRIF holder?

  9. Dave

    Great post. I have a nephew who could benefit from this and will be helping my brother set this up. Even if you exceed the $93K in income, 100% back on the first $1000 each year is pretty incredible. Any word on whether Questrade will get into this space anytime soon? Thanks again!

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