A registered disability savings plan (RDSP; French: Régime enregistré d'épargne invalidité) is a Government of Canada program designed to enable individuals with disabilities, with assistance from family and friends to save for their future financial security. The Government of Canada assists people to save with the Canada Disability Savings Program, consisting of the Canada Disability Savings Grant and Canada Disability Savings Bond. The Canada Disability Savings Grant matches personal contributions. The Canada Disability Savings Bond provides funding to RDSPs of people with low and moderate incomes.[1][2]
The RDSP is similar to a registered education savings plan. A person who establishes an RDSP can make contributions to the plan up to a lifetime limit of $200,000 for the benefit of the person named the beneficiary.[3]
Contributions are not tax-deductible, and earnings and growth accrue on a tax-deferred basis. Anyone can contribute. The contributions grow tax-free until withdrawn – at which time a proportion of the plan (earnings and growth received) is taxable and will need to be declared as income in the hands of the beneficiary at that time. In most cases it should not affect eligibility for provincial disability benefits. There are no maximum annuations. Contributions can be made up to the end of the year in which the beneficiary turns 59 years old.
This is not an alternative to setting up a trust for a person with disabilities, but should be used in conjunction with other vehicles, such as Henson trusts, insurance products, segregated funds and Lifetime Benefits Trusts to build a solid financial plan.