RDSP

Auto Accidents

Tax Time!  Let's Talk about RDSPs!

All about RDSPs

Many people are aware of RRSPs or Registered Retirement Savings Plans, however RDSPs may not sound as familiar. 

What is an RDSP?

An RDSP is a Registered Disability Savings Plan.  The Canada Revenue Agency (CRA) describes these accounts as savings plans intended to help parents and others save for the long-term financial security of a person who is eligible for the disability tax credit (DTC).  The key is saving for the long term.

An RDSP is like an RRSP for people with qualifying disabilities.  They offer tax-deferred growth, but differ by the fact that the contributions to RDSPs are not tax-deductible- meaning they do not reduce the taxable income.

Key Facts about RDSPs

• The federal government gives contributions up to $90,000 in grant and bond monies to plan over one’s lifetime
• Restrictions include that one has to wait 10 years after the first deposit before making a withdrawal or they will face decreased bond money and interest
• Age limitations include that no grant or bond monies will be contributed to the plan after the year in which the beneficiary turns 49
• Withdrawals must begin in the year during which the beneficiary turns 60

You can still consider investing in an RDSP after age 49 – if you have exhausted your RRSP contribution room or have maxed out your Tax-Free Savings Account (TFSA), this is a great place to find tax-deferred growth. 

RDSPs also preserve provincial disability benefits or the Ontario Disability Support Program (ODSP), as contributions to the RDSP and payments from the account are exempt from ODSP limitations.  This is key for those who are collecting both ODSP and insurance settlements, as well as for the family members of people with qualified disabilities, as they can contribute to the RDSP without causing ineligibility of their family member for ODSP benefits. 

For more information click here and click here or talk to a trusted financial advisor. 

In the event that you or your loved ones may require assistance, we invite you to call a lawyer like Andrea Thielk at Injury Law Group to discuss your legal rights and options.  At Injury Law Group, there is no obligation to proceed with your case, and your first, half-hour consultation is free.