HANCOCK FINANCIAL SOLUTIONS
The Registered Disability Savings Plan helps people with disabilities save for the future. If you open an RDSP and make annual contributions to the account, the government will make additional contributions. Even if you are unable to afford to make contributions to your RDSP, the government may still make contributions, based solely on your income.
The amount that you can collect from the Government over a lifetime is a total of $90,000 ($20,000 in bonds + $70,000 in grants).
The Bond is solely based on family income.
• If your family income is $30,450* or less the government will contribute $1,000 each year.
• If your family income is between $30,450* and $46,605* the government will contribute a pro-rated amount of the $1,000 Bond
• If your family income is more than $46,605* no Bond is paid.
The government will continue making Bond contributions until they have contributed $20,000 or until and including the year the person turns 49 years of age.
Family income is based on the parents’ income until the year the person with the disability turns 19 years of age. Once the person with the disability reaches the year they turn 19, government Grant and Bond contributions are based on their own income if they are single. If they are married or in a common-law relationship, family income is based on the couple’s collective income.
*Income thresholds are for 2014 and are indexed to inflation.
If you make a contribution to your RDSP, the federal government will match that contribution.
If your Family Income is Less Then or equal to $93,208*
• For the first $500 you contribute every year, the government matches 3 dollars for every 1 dollar. You put in $500 and the
government will put in $1,500.
• For the next $1,000 you contribute, the government matches 2 dollars for every 1 dollar. You put in another $1,000 and the
government will put in an additional $2,000.
If your Family Income is Greater than $93,208*
• For the first $1,000 you contribute every year, the government matches dollar for dollar. You put in $1,000 and the government
will put in $1,000.
* The government will continue making Grant contributions until you’ve contributed $70,000 or until the year the person turns 49 years of age.
Withdrawing Your Money
RDSP withdrawals must begin by the end of the year you turn age 60. You may withdraw funds earlier, but be sure to note that once a withdrawal of any amount is made, $3 worth of federal grants and bonds paid into the RDSP in the previous 10 years have to be repaid for every $1 withdrawn.
Withdrawals will consist of non-taxable contributions, taxable Government monies and taxable growth.
8 things to know about RDSPs
1. The beneficiary is the person with the disability who will receive the money in the future.
2. The plan holder is the person who opens and manages the RDSP. The beneficiary can also be the plan holder.
3. There is no annual limit on contributions but the lifetime contribution limit for a beneficiary is $200,000.
4. Contributions can be made to the plan until the beneficiary turns 59.
5. Contributions are not tax deductible, but your savings grow tax free. There is no tax on the investment earnings, as long as they stay in the plan.
6. Until age 49, the beneficiary may be eligible for government contributions to the RDSP under the Canada Disability Savings Grant, and
Canada Disability Savings Bond.
7. RDSP savings can be held in a variety of investments, depending on where the plan is opened.
8. The beneficiary must start taking regular payments from the plan by age 60.