Registered Disability Savings Plan (RDSP): The One with the Highest Government Matching

What is a Registered Disability Savings Plan (RDSP)?

The Registered Disability Savings Plan (RDSP) is a savings plan intended to help an individual who is approved to receive the Disability Tax Credit (DTC) to save for their long-term financial security. It is administered by the Canada Revenue Agency (CRA).

Who can be a beneficiary?

Only individuals approved for the Disability Tax Credit (DTC) can be beneficiaries of an RDSP.

Contribution rules

• Contributions are not tax deductible.
• Contributions can be made until the end of the year in which the beneficiary turns 59.
• Withdrawn contributions are not included as income to the beneficiary.

Government matching: Grant and Bond

Two government amounts are available:

• Canada Disability Savings Grant (grant)
• Canada Disability Savings Bond (bond)

These amounts, plus investment income and rollovers, are included in the beneficiary's income when paid out of the RDSP. Specific matching rates are not listed on the official page; check current rates at the time of application.

Relationship with DTC

To open an RDSP, you must first be approved for the Disability Tax Credit (DTC). The RDSP beneficiary eligibility is directly tied to DTC approval.

How to open an RDSP?

The official page covers topics such as:

• Who can be a beneficiary, who can contribute
• Contribution limits, transfers between RDSPs, rollovers, and reporting
• How to open an RDSP, who can open it, who can be a holder
• What happens if the beneficiary is no longer eligible for DTC or dies
• Types of payments, when payments are made, how to report them, rules when grants and bonds exceed contributions
• Taxable investments and who is liable

For specific steps and forms, refer to official guides:

• Guide RC4460 (Registered Disability Savings Plan Guide)
• Guide RC4064 (Disability - Related Information)
• Form T2201 (Disability Tax Credit Certificate)

Anti-avoidance rules

RDSPs are subject to anti-avoidance rules similar to those for RRIFs, RRSPs, and TFSAs. New rules apply to transactions after March 22, 2017; previous rules apply to earlier transactions. Special taxes may apply to certain advantages, prohibited investments, and non-qualified investments.

Official sources

• https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-disability-savings-plan-rdsp.html