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Contact our Client Services team
Do you need help setting up a client’s RDSP or deciding on which investments to hold within it? We can help. Email us at service@mackenzieinvestments.com or phone us at 1-800-387-0614
Registered Disability Savings Plan (RDSP)
Enabling over 60,000 Canadians with disabilities to save for their future.
Helping Canadians with disabilities save for the future
Many Canadians living with disabilities aren’t getting the financial help they need today, to ensure they’re better off tomorrow. In fact, only 35% of those who qualify for a Registered Disability Savings Plan (RDSP) have opened one since the program’s inception.*
Mackenzie wants to help change that. We’ve become experts in this space, offering guidance, knowledge and a simplified approach.
What is an RDSP?
An RDSP is a registered savings plan established by the federal government to assist families in saving for the long-term financial security of individuals with severe disabilities. Government matching and extra funding for low-income beneficiaries form part of the plan. Contributions to the plan are not tax deductible, but the earnings grow tax free while held in the plan.
Why RDSPs are the best way to save
- Anyone can contribute to an RDSP with written consent of the account holder.
- The total lifetime contribution for each beneficiary is $200,000, with no annual contribution limits.
- Contributions can be matched, based on family net income, with up to $3,500 a year in Canada Disability Savings Grants (CDSG). In addition, they can receive up to $1,000 in Canada Disability Savings Bonds (CDSB) without any contributions being made.
- The money you contribute grows tax free.
- Savings and withdrawals do not affect federal or many provincial income tested benefits.
- You may apply for CDSG and CDSB back to the date of diagnosis, to a maximum of 10 years. The maximum grant for a single year per account is $10,500 and maximum bond is $11,000.
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What is a Registered Disability Savings Plan (RDSP)?
An RDSP is a registered savings plan established by the Federal Government to assist families in saving for the long-term financial security of individuals with severe disabilities. Government matching and extra funding for low-income beneficiaries form part of the Plan. Contributions to the plan are not tax deductible, but the earnings grow tax deferred while held in the plan.
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What is the role of the account holder?
The account holder is the individual who opens the RDSP, makes contributions to the plan and authorizes third party contributions.
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What is the role of the beneficiary?
The beneficiary is the person with the disability who will benefit from the RDSP.
Eligibility
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Who is eligible for an RDSP?
To qualify to be an RDSP beneficiary, you must:
- Be eligible for the Disability Tax Credit
- Be a resident of Canada
- Be less than 60 years of age
- Have a valid Social Insurance Number
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How does an individual qualify for the Disability Tax Credit (DTC)?
A person is DTC-eligible in a tax year if they have a severe and prolonged physical or mental impairment, and meet other eligibility criteria to qualify for the credit under section 118.3 of the Income Tax Act. To be entitled to the credit, Form T2201, Disability Tax Credit Certificate, must have been completed by a qualified physician or nurse practitioner and submitted to the Canada Revenue Agency for approval. CRA typically takes 8 weeks to review the application. Check CRA processing times - Canada.ca. For more information on the disability tax credit, see Persons with disabilities on the CRA website.
If someone is interested in opening an RDSP but hasn’t already applied for the DTC, they must be approved for the DTC prior to opening an RDSP. If an RDSP account is opened, grant and bond monies will not be payable until the DTC approval has been verified.
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Who can be the account holder on an RDSP?
The following can open an RDSP and become the holder of the plan:
- A beneficiary who has reached the age of majority
- A legal parent, guardian, tutor, curator of the beneficiary, or an individual who is legally authorized to act for the beneficiary
- A public department, agency, or institution that is legally authorized to act for the beneficiary.
- When a beneficiary’s capacity is in doubt an RDSP can be opened by a Qualifying Family Member, this includes a parent, sibling, spouse or common-law partner. This provision is available until 2026.
Application and transfers
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What are the steps of opening a new RDSP account?
To open an RDSP account and apply for the grants and bonds, your client will need to fill out:
1) Complete the Mackenzie’s RDSP Application Form.
2) Complete the grand/bond application form (EM5608).
3) Complete the following annex forms if applicable
- Annex A: This form is to be completed by the joint holder (EMP5609).
- Annex B: This form is to be completed by the primary caregiver if the beneficiary is 18 years of age or under at the time of application, or was 18 years or under during any part of the ten-year period prior to application, and was eligible for the DTC for any of those years (EMP5610).
4) Complete the following form if contributions are from anyone other than the Account Holder(s) : RDSP Holder Consent Form.
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What do I need to transfer an existing RDSP account to Mackenzie?
In addition to completing the RDSP account opening forms, please also fill out:
- RDSP Transfer Form (client signature not required).
- Holder Consent to Registered Disability Savings Plan (RDSP) Transfer (client signature required).
Remember, a beneficiary can only have one RDSP plan, so the original plan must be terminated immediately after the transfer between issuers is complete.For more information on RDSP transfers, please refer to our guide: How to transfer an RDSP to Mackenzie Investments.
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What are the timelines to open/transfer an RDSP account?
- Open new accounts: Once we’ve received the completed forms in good order, the account should be open in one to three business days.
- Transfer accounts: Due to the complexity of an RDSP, transfers between issuers may require two to four months to complete, provided all documents are in good order and holder/beneficiary information matches the information at the Social Insurance Registry (SIR).
Contribution and investments
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Who can contribute to an RDSP?
Anyone can make a contribution to an RDSP for a beneficiary, with the holder’s written consent.
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How much can be contributed to an RDSP?
A maximum amount of $200,000 can be contributed to each beneficiary’s RDSP, and contributions can be made until December 31st of the year the beneficiary turns 59. This is a lifetime limit and is not reset if an RDSP is transferred or closed and later re-established. There is no annual contribution limit.
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What kind of investments can an RDSP hold?
Qualified investments for RDSPs are generally the same as those for Registered Retirement Savings Plans (RRSPs) and Registered Education Savings Plans (RESPs) and include cash, stocks, bonds, GICs, mutual funds and a variety of other investments. A Mackenzie RDSP can hold Mackenzie mutual funds. A full list of eligible funds can be found later in this document.
Grants and bonds
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What is the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB)?
The Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) are federal programs that provide payments to RDSPs to encourage long-term savings through an RDSP. Grants and bonds are available to beneficiaries up until December 31st in the year they reach age 49. Contributions can be matched, based on family net income, with up to $70,000 in Canada Disability Savings Grants and up to $20,000 in Canada Disability Savings Bonds.
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How does Canada Disability Savings Grant (CDSG) work?
- CDSG is a matching program based on family net income. Contributions to an RDSP may qualify for payments from the CDSG, up to a lifetime maximum of $70,000 per beneficiary.
- Maximum annual CDSG - $3,500 for family net income less than $111,733
- Maximum annual CDSG - $1,000 for family net income over $111,733
- Family net income is based on:
– Where the beneficiary is a minor, the parents’ family net income
– Where the beneficiary is an adult, the beneficiary’s net income (and spouse, if applicable)
*Income amounts shown are for 2024. The income amounts are updated each year based on the rate of inflation. If CRA does not have income information available for a beneficiary the maximum CDSG a beneficiary will receive for the year is $1,000.
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How does Canada Disability Savings Bond (CDSB) work?
- CDSB is meant for low-income families and no contributions are required in order to be eligible for the CDSB. It is strictly based on family net income. Available to beneficiaries whose family net income is less than $55,867.
- Maximum annual CDSB - $1,000 for family net income below $36,502
- Smaller amounts of CDSB for family net income between $36,502 and $55,867
- Maximum lifetime CDSB is $20,000
- Family net income is based on:
– Where the beneficiary is a minor, the parents’ family net income.
– Where the beneficiary is an adult, the beneficiary’s net income (and spouse, if applicable).
If CRA does not have income information available for a beneficiary, they will not be eligible for CDSB.
Withdrawals
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How can withdrawals be made from an RDSP?
There are two types of withdrawals (payments) from an RDSP:
a. Lifetime Disability Assistance Payments (LDAPs) – recurring annual payments that continue until funds within the account have been depleted or the beneficiary’s death. Payments can begin at any age but must commence by the end of the year in which the beneficiary turns age 60.
b. Disability Assistance Payments (DAPs) – periodic lump sum payments that can be paid to the beneficiary any time after the RDSP is established.
These payments may be subject to the Assistance Holdback rules.
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What is the 10-year rule?
The Assistance Holdback Amount (AHA) is made up of all grant and bond that was deposited to the RDSP in the 10 years prior to a withdrawal. The purpose of the AHA is to ensure that RDSPs are used for long-term savings, and also to ensure that government funds contributed are not withdrawn and used as leverage for matching grants in future years.
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Are RDSP withdrawals taxable?
RDSP withdrawals are made up of contributions, growth, grants and bonds. Contributions are generally not taxable, while income growth, grants and bonds are taxable in the hands of the beneficiary. Contributions are taxable if the source of the contribution was a rollover of RRSP/RRIF or RPP monies of a deceased supporting parent or grandparent or a rollover from the AIP from an RESP.
When a beneficiary makes a withdrawal from an RDSP the government will look to see if any grant or bond was contributed to the account in the 10 years prior to the withdrawal. If it was for every $1 redeemed $3 of grant/bond needs to be repaid to the government.
Advisor resources
* Investor Economics, 2022
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This should not be construed as legal, tax or accounting advice. This material has been prepared for information purposes only. The tax information provided in this document is general in nature and each client should consult with their own tax advisor, accountant and lawyer before pursuing any strategy described herein as each client’s individual circumstances are unique. We have endeavored to ensure the accuracy of the information provided at the time that it was written, however, should the information in this document be incorrect or incomplete or should the law or its interpretation change after the date of this document, the advice provided may be incorrect or inappropriate. There should be no expectation that the information will be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise. We are not responsible for errors contained in this document or to anyone who relies on the information contained in this document. Please consult your own legal and tax advisor.