A Registered Disability Savings Plan is intended for long-term financial security for an eligible person with a disability. It is not simply another name for a regular savings account, and contributions are not tax deductible.
The useful first step is to establish eligibility and prepare for a conversation with an institution that offers the plan.
Bring the right information
The beneficiary generally needs Canadian residency, a social insurance number and approval for the Disability Tax Credit. An RDSP can generally be opened through the end of the year the beneficiary turns 59. Check the approval period and any eligibility gaps rather than relying on a diagnosis alone.
The beneficiary is the person the plan benefits. The holder opens and manages it and may be the same person. Who can act as holder depends on age, contractual capacity and the applicable rules. The institution should explain the documents it needs for that situation.
Ask about both grants and bonds
The Canada Disability Savings Grant can match eligible contributions. The Canada Disability Savings Bond can be available to eligible low- and modest-income beneficiaries without a personal contribution. Grant and bond eligibility generally ends after the year the beneficiary turns 49, earlier than the contribution age limit.
Income, previous eligibility and carry-forward rules affect what may be available. Bring current tax-filing information and ask the institution to explain the entitlement calculation before choosing a deposit amount. Do not assume a headline maximum will be paid automatically.
Understand withdrawals before committing money
RDSPs are designed for long-term use. Withdrawals can require repayment of government assistance under the plan's rules. Ask for an explanation of that consequence and of the taxable and non-taxable parts of future payments.
Keep the plan documents, grant and bond application records, and contribution confirmations together. For a household managing several benefits, reviewing the complete situation helps choose a contribution schedule that fits actual cash needs.
