A comprehensive guide to the Registered Disability Savings Plan in Canada

The Registered Disability Savings Plan (RDSP) is a specialized savings plan designed to provide long-term financial security for individuals with disabilities in Canada.

The plan offers a tax-deferred savings account that helps individuals with disabilities, and their families, plan for long-term financial security.

Who’s eligible for an RDSP?

To be designated as a beneficiary of an RDSP, you must meet certain criteria:

Being eligible for the Disability Tax Credit (DTC)
Having a valid Social Insurance Number (SIN)
Being a resident of Canada
Being under the age of 60

It’s also important to note that only one RDSP can be held by a beneficiary at any given time.

Claiming RDSP grants and bonds

Contributions made into an RDSP may qualify for grants and bonds. These incentives aim to further boost savings and provide additional financial support.

The Canada Disability Savings Grant provides matching grants of up to 300%, depending on the beneficiary's income and contributions.

The Canada Disability Savings Bond offers annual bonds of up to $1,000, based on the beneficiary's income.

RDSP contributions and contributors

The person who establishes and contributes to the RDSP on behalf of the beneficiary is known as the Holder.

For beneficiaries over the age of majority, the holder must be the beneficiary themselves. However, written permission from the holder is required for anyone else to contribute to the RDSP.

Anyone, with the written permission of the holder, can contribute to an RDSP. However, each contribution must be made while the beneficiary is a resident of Canada.

Investing your RDSP funds

Investing your RDSP funds wisely is crucial to maximizing growth and achieving your long-term financial goals. Within an RDSP, qualified investments offer various options to suit your risk tolerance and financial objectives. Consider the following investment choices:

Mutual funds: RDSPs also provide the opportunity to invest in mutual funds. Mutual funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds or other securities. Mutual funds offer potential growth over the long term, but come with various levels of risk.

Stocks and bonds: RDSP funds can also be invested in stocks and bonds. Stocks offer potential growth and dividends, but come with higher risk. Bonds provide fixed interest payments and lower risk. Including stocks and bonds in your RDSP portfolio could diversify investments and balance risk.

Getting started with your RDSP

Getting started and choosing the right investment mix for your RDSP is a crucial decision that requires careful consideration.

An Investment Advisor can help create an investment strategy that assesses your risk tolerance and ensures you’re well-aligned with your financial goals.

Disclaimer : Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities; a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.

Contact an investment advisor