RDSP: Securing the financial future of
Canadians with Disabilities
5 min read
What is an RDSP, and how can it help secure long-term financial support and stability for your loved ones living with disabilities?
Learn how an RDSP can benefit your loved ones
living with disabilities
If you have a child or a sibling with a disability, you have probably experienced some financial anxiety for their future. Individuals with disabilities often face higher health care expenses and may struggle to maintain full-time employment. To help address these challenges, the Canadian government offers programs like the Registered Disability Savings Plan (RDSP). An RDSP offers unique features to help provide financial security for differently abled individuals, yet only 32% of eligible Canadians are aware of it. Learn how an RDSP can benefit your loved ones.
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Now that you have a clear idea of what an RDSP can do, let’s break down how it works and who it’s meant for
An RDSP (Registered Disability Savings Plan) is a long-term savings plan designed to help individuals with disabilities grow their savings tax-deferred, while also benefiting from generous government contributions. To be eligible, the beneficiary must be a Canadian under the age of 60 and approved for the Disability Tax Credit. An RDSP can be opened by a parent, family member, or anyone legally authorized by the beneficiary. If the beneficiary is capable of managing their finances, they may open the account themselves. While there is no annual contribution limit, lifetime contributions are capped at $200,000. Contributions are not tax-deductible, but any earnings—such as interest or dividends—can grow tax-deferred within the plan.
Unlocking the Full Financial Potential of an RDSP
for Your Loved One’s Future
An RDSP offers multiple powerful advantages to support the financial future of individuals with disabilities. First, families can kick-start savings through government contributions, such as the Canada Disability Savings Grant (CDSG)—which matches contributions up to $70,000, with matching rates of 100% to 300% based on income. In addition, the Canada Disability Savings Bond (CDSB) provides up to $1,000 per year (lifetime maximum of $20,000) to low-income beneficiaries, even if no contributions are made. RDSPs also offer tax-deferred growth—you don’t pay taxes on earnings until withdrawal, and even then, only the grants, bonds, and returns are taxed, not personal contributions. Beneficiaries also enjoy complete flexibility in how funds are used. Contributions can come from multiple sources, including friends and family, up to a lifetime limit of $200,000. Furthermore, RRSP/RRIF rollovers (up to $200,000) from a deceased parent or grandparent can be transferred into an RDSP without estate taxes, though these amounts aren’t eligible for matching grants. Finally, RDSPs provide diverse investment options—such as stocks, mutual funds, and ETFs—to help accelerate growth and build long-term financial security.
How can families make the most of an RDSP (Registered Disability Savings Plan)?
To get the most out of an RDSP, it’s important to start early—there’s no minimum age requirement, so opening the account as soon as possible for a child with special needs can help maximize government grants and allow the funds to grow over a longer period. Families should also strategize contributions to ensure they’re receiving the full benefit of available grants and bonds. Staying informed about regulatory changes to RDSPs is key to maintaining eligibility for government contributions. Lastly, integrating the RDSP into the family’s overall financial plan can offer a clearer picture of the beneficiary’s long-term financial health and retirement security. By taking advantage of these features, families can provide greater financial stability and independence for their loved ones living with disabilities.
