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