This morning, I attended the Registered Disability Savings Plan (RDSP) workshop and Q&A panel held by the DDA, with a representative from the Royal Bank of Canada (RBC), Ken Lagasse Chartered Accountants, and DC Complete Financial Services. For anybody who is unfamiliar with the Registered Disabilities Savings Plan, it is a new savings program designed to assist Canadians with disabilities and their families. I’ve included below some information I found quite interesting from this workshop.
Amongst some of the qualifications for the RDSP, include:
- You must have a valid Social Insurance Number, be a Canadian Residence, be under the age of 60, and eligible for the Disability Tax Credit
- The RDSP provides matching contributions of 100%, 200%, or 300% annually with a lifetime limit of $70,000
- There is a 10 year claw back for the RDSP, and the money withdrawn for the RDSP must be used for the benefit of the beneficiary
Currently, only two financial institutions in BC allow you to open an RDSP account – the Bank of Montreal and RBC. Because today’s speaker was from RBC, she explained the process of opening an RDSP from an RBC perspective. To open an account, you must either:
- Make an appointment at any RBC branch
- Call Royal Direct 1-800-769-2511
- Visit any RBC branch (may require wait time)
For the above, you do not need to be an existing RBC client. If you intend to make an appointment at RBC, you should confirm what you need to bring for your meeting (i.e. government issued identification, legal documents, etc). The entire setup for this will take approximately an hour, with 15 minutes for the forms and an additional 45 minutes to ensure the right options. An important note about the RDSP – disabled individuals can be the beneficiary of only one RDSP and each RDSP can only have one beneficiary.
Although the RDSP may sound like an excellent option for insuring the future of someone with a disability, it was suggested by our panel of experts that the RDSP is something that should be considered only if you have extra funds to put into a savings plan, and that it is not intended for investment purposes. The RDSP on it’s own may very likely not be enough to insure financial comfort for the life of a beneficiary. When considering open an RDSP, it is very important to speak with a financial specialist on what options may be best, and if an RDSP is something that can be integrated into the financial plan for your beneficiary.
The below are a few more quick facts about the RDSP:
- Not any person with a disability can qualify for the RDSP, you must be eligible for the Disability Tax Credit to qualify for the RDSP
- The RDSP is taxable
- Withdrawals can be taken from the RDSP but with penalties – there is a 10 year claw back rule on grants and bonds for any withdrawal
- RDSP contributions are not tax deductible
The information above is for informational purpose only, and current for this blog post. No warranty is expressed or implied. Neither myself nor the Developmental Disabilities Association is liable for any damages.