Scotiabank Launches RDSPs

If you would like easy to understand information on the new Registered Disability Savings Plan please visit www.rdsp.com.

Canadians can now visit all 5 national banks and open up a Registered Disability Savings Plan.  Scotiabank came out today and began offering their version of the RDSP to their clients.  Similar to many of the other banks, Scotiabank will be offering a range of investment options, including Cash/Savings, GIC’s and Mutual Funds.

Scotiabank has joined Royal Bank of Canada, Bank of Montreal, CIBC, and TD Canada Trust in supporting this program for people with disabilities.  To find out more about opening an RDSP with Scotiabank you can visit their website at http://scotiabank.com/cda/content/0,1608,CID13346_LIDen,00.html or call Scotiabank Wealth Management Contact Centre at1-877-929-4499 and talk to one of their investment specialists.

Do you want the 2009 Grant? Make sure to contribute to your RDSP by December 31st, 2009!

If you would like easy to understand information on the new Registered Disability Savings Plan please visit www.rdsp.com.

Are you hoping to get the 2009 Grant for your Registered Disability Savings Plan?

Many of you will remember that to get the 2008 Grant deposited into your RDSP you had to make sure to contribute by March 2nd, 2009.  Notice - This was unique for 2008 Grants.  For 2009 Grants, you will be required to contribute by December 31st, 2009.  If you do not contribute before this time, any contributions you contribute in 2010 will be for 2010 Grants and will not be applicable to 2009.

Why has the deadline for Grants changed from 2008 to 2009.  As many of you may recall, the 2008 contributions were originally supposed to be received by December 31st 2008 in order to get the 2008 Grant.  As BMO was the first bank to offer RDSPs, and did not begin to offer them until late in December of 2008, that left little time to get your RDSP set up and your 2008 contributions in.  In response, the Finance Minister extended the deadline to March 2nd, 2009 to make sure there was enough time for people to open a plan and contribute for 2008.

This was for 2008 only! Make sure to contribute every year by December 31st to get your Canada Disability Savings Grant for that year.

Impact of the RDSP – BC Scan of Services and Benefits

If you would like easy to understand information on the new Registered Disability Savings Plan please visit www.rdsp.com.

PLAN is undertaking a scan of the pan-Canadian impact of the RDSP on services and benefits accessed by people with disabilities.  This scan will examine the federal and provincial programs and benefits to evaluate the full range of implications of the RDSP on income, benefits, and other programs currently being utilized by people with disabilities.  Once we have a good overview of what programs and services people are receiving, and how they might be impacted, we can then develop proper strategies to advocate for any changes that are needed.

If you have a moment, we would really appreciate your input/feedback on the attached scan of British Columbia.  We are trying to identify all the benefits and services someone in the province of BC could receive if they have a disability, and then whether these services or benefits are asset or income tested.  Since the BC Government has exempted the RDSP from asset and income tests for those receiving BC Disability Benefits (PWD), many of the services and benefits will not be affected.

We are posting the following draft version of our British Columbia scan, but will be providing consequent scans for each province/territory.

Please keep in mind that this is a draft version and we fully expect it to have omissions or information that is incorrect.  The feedback you provide will help us make sure the final version is as accurate as possible.

BC Benefits Scan

If you have comments or feedback, please e-mail inquiries@plan.ca, and put “Scan Feedback, c/o Doug Brodhead” in the header”.

Thank you for all your support.

TD Canada Trust begins offering RDSPs

Now the fourth national bank to begin offering RDSPs to Canadians, TD Canada Trust has announced that the RDSP is now available.  With Scotiabank likely to come on board on November 23rd of this year, this will bring the total to 5 banks offering the RDSP nationally, and one local financial institution in Quebec.  Currently, Bank of Montreal, Royal Bank of Canada, CIBC, TD Canada Trust, and FMOQ (Quebec) are all offering the plan, with totals nearing close to 20,000 accounts opened and nearly 40 Million distributed through Canada Disability Savings Grants and Canada Disability Savings Bonds.

Banks are now starting to become more streamlined around setting up the RDSP, and receiving Federal Government contributions into the plan.  As many of you probably noticed, it has taken a while for everyone to get up and running for the RDSP program, and we are glad to see that all five national banks will be offering the plan by the end of the year.

In terms of investments, the TD Canada Trust RDSP allows TD Canada Trust GICs and term deposits, as well as the growth potential and flexibility of TD Mutual Funds.  If you would like to view TD Canada Trusts information on the RDSP and visit their website you can go to http://www.tdcanadatrust.com/rdsp/index.jsp and browse.

Registered Disability Savings Plan is celebrated by PLAN, Prime Minister Stephen Harper, Rick Hansen, and the Honourable Steven Fletcher

If you would like easy to understand information on the new Registered Disability Savings Plan please visit www.rdsp.com.

PLAN recognized Prime Minister Harper with it’s highest honour yesterday – an honourary lifetime membership – in recognition of the implementation of the Registered Disability Savings Plan.  The Prime Minister was joined by Steven Fletcher, Minister of State for Democratic Reform, and Rick Hansen, President and CEO of the Rick Hansen Foundation at an event to raise awareness of Canada’s new RDSP.  The event was hosted by the Burnaby Association for Community Inclusion.

To see video of Prime Ministers speech click on this link: http://vimeo.com/7339976

Excerpt from the official press release:

“While barriers still exist, people like Rick Hansen are a testament to what can be accomplished through courage and determination,” said the Prime Minister.  “Through initiatives like the Registered Disability Savings Plan, our government is helping Canadians with disabilities make even greater contributions to our country.”

Click here for the entire Press Release

Rob Bromley, Chair of PLAN, Prime Minister Stephen Harper, and Jack Styan, Executive Director of PLAN at the announcement on the RDSP

Prime Minister Stephen Harper speaking at the RDSP announcement, with Rick Hansen, CEO, Rick Hansen Foundation and the Honourable Steven Fletcher, Minister of State for Democratic Reform

Mapping your Plan – Why it is important to tell your financial advisor exactly how you want to use your RSDP

If you would like easy to understand information on the new Registered Disability Savings Plan please visit www.rdsp.com.

The Registered Disability Savings Plan was designed to be a long-term option for those looking to plan for the future financial security of themselves or their family member.  As such, the plan will be the most beneficial for those who are able to open and save over a number of years.  For many people, they may not have the option of saving over a larger number of years, and will therefore look to use the plan somewhat differently then those (for instance) who are saving for a child and can start early.

A friend of mine was recently explaining how she was having some trouble explaining to the bank that she didn’t want to receive any grant and bond, and instead wanted to simply put in her money so that she could take out payments whenever she wanted.  At 48, she realized that she was only eligible for two years of grant, and wanted to be able to use the RDSP right away, instead of waiting to take out payments at the age of 60.

Now from a purely financial standpoint, her deciding to forgo receiving two years of the grant doesn’t make sense.  In order to maximize the amount of money in the plan, it would make more sense to take advantage of the grant.  I mean, who wouldn’t want free money into their plan?

That would be true if it were all about money….but it’s not.

For some people like my friend, they have been restricted from using money they receive in the manner they want.  Although different for each jurisdiction, in most provinces the regulations tied to those receiving disability benefits mean that the amount of money you can save and spend is restricted, along with restrictions on what you can spend it on.  For someone who has had to justify every purchase they ever make to make sure they don’t lose their disability benefits, having the opportunity to put money away, and then spend it on whatever they want is a very exciting prospect.

So why is there confusion?

1)  Many people are still uncertain as to how you can take out payments, and what are the rules and restrictions (see my post on payments by clicking here) .

2) The launch of the RDSP happened very quickly and many of the financial institutions (along with everyone else) are still trying to wrap their heads around what is allowed and what isn’t.

3) Financial Advisors are trained to make you money, so if you are proposing to use the plan in a way that makes less money it will be important to explain why.

4) Financial institutions are not required to allow every type of payment, only payments determined by the Lifetime Disability Assistance Payment formula.  From what we have seen so far, most have been very flexible around the types of payments they allow and have not restricted payments to the formula.

The KEY: Always make sure to outline your intentions and plan for the RDSP.  Answer the question:  How do I want to use it?  When do I want to take out payments? Do I want to use it as a long term savings plan, or do I want to begin using it now? What type of payments do I want to take out, lump sums or annual payments?

By letting your financial advisor know how you intend to use the plan, you can make sure that there is no confusion, and that it is best suited for you.

Bill 13 – Moving Forward with Personal Planning Legislation

If you would like easy to understand information on the new Registered Disability Savings Plan please visit www.rdsp.com.

On October 7th it was announced that Attorney General Mike de Jong  introduced Bill 13 into the BC Legislature.  This Bill proposes amendments to the Adult Guardianship and Planning Statutes Amendment Act which was passed in October of 2007.  This bill will enable the proclamation of personal planning legislation, and will introduce important amendments to the Representation Agreement Act, the Power of Attorney Act, and the Health Care Consent and Care Facility Admission Act in British Columbia.

These amendments will make Representation Agreements more accessible to individuals and families across the province, while providing a greater degree of certainty for anyone who has already established a Representation Agreement.  Bill 13 will also allow any amendments to Planning Statutes to be brought into effect separately from the Adult Guardianship Act amendments.

With the launch of the Registered Disability Savings Plan, we have seen a rise in people setting up a Representation Agreements across the province.  As someone with a Representation Agreement in BC is seen to be a “legal representative”, it has allowed many people in BC the opportunity to become a holder for their loved ones RDSP without having to get full legal guardianship.

To view the press release from Ministry of the Attorney General visit: http://www.news.gov.bc.ca/Default.aspx?organization_obj_id=56429306-8c3e-4991-aeb2-1cc86f20bfdd and click on the news release for October 7th, 2009.

The availability of Representation Agreements in BC has brought into focus the absence of comprehensive supported decision-making vehicles in many other Canadian provinces.  We have been working with the Federal Government, financial institutions, and other disability organizations to find a suitable solutions, and will continue to do so.  There has been some significant work done on this issue and we hope to have something brought forth in the near future.  We will provide an update as soon as we know more.

For more information on Representation Agreements you can visit www.plan.ca and check out our online course.

Beware of Promises Too Good to be True!

If you would like easy to understand information on the new Registered Disability Savings Plan please visit www.rdsp.com.

Beware of Promises Too Good to be True!

by Patricia Bowles, Director of Communications & Education, British Columbia Securities Commission 

Almost everyone knows this saying.  But we hear over and over again that people lose money when they fall for a scam promising high returns with low or no risk. There is no such thing.   If the investment promises high returns, then it is also promising high risks – meaning you can lose all of your money.

The new 2009 Investor Index tells us that 4% of Canadians have invested money in what turned out to be an investment fraud. One of the more surprising statistics in this year’s survey says that 38% of British Columbians are approached for a fraudulent investment.  That’s 10% higher than the national average.

It also tells us that people can be approached by strangers, either on the phone or at the door, through the internet, by going to a seminar, through advertisements in the paper, on the radio or TV, or through family and friends.

If you are approached for an investment opportunity, do us a favour. Go to InvestRight.org and check out Protect Your Money. Watch and listen to each of the four modules.  It provides investors with checklists and tips to evaluate and research investment opportunities for risks and potential fraud. It tells you how to report a fraud, how to share the information with friends and family. Get a second opinion.  Ask an accountant or banker to look at the opportunity.  Do your research.  Check to see if the advisor is registered or has ever been disciplined by a securities regulator.  Simply Google the person’s name.

When it comes to money, make your decision after you have done your research.  The worst thing you can do is make an impulsive decision on the spot and write a cheque.

You can call us at 1-800-373-6393.

Patricia Bowles, Director of Communications & Education

Personal Tax Planning and the RDSP – an article by Jamie Golombek

If you would like easy to understand information on the new Registered Disability Savings Plan please visit www.rdsp.com.

Recently a very comprehensive and well-researched article was published on the Registered Disability Savings Plan in the Canadian Tax Journal.  The article was written by Jamie Golombek, Managing Director, Tax & Estate Planning for CIBC Private Well Management, and co-edited by Pearl E. Schusheim and Gena Katz.  Some of you may have come across Mr. Golombek’s column in the National Post called “Tax Expert” which delves into the intricacies of tax planning.

The article published in the Canadian Tax Journal is entitled “Planning with Registered Disability Savings Plans”, and is a thorough look at all the various parts of the RDSP.  Is a great resource for financial planners and for any adventurous individuals who want to know every detail about the plan.

If you want to take a look at the article, you can visit Jamie’s website at http://www.jamiegolombek.com or click on one of the following links:

English Version – Planning with Registered Disability Savings Plans

French Version - Stratégies de planification et regime enregistré d’épargne-invalidité

Stratégies de planification et régime

enregistré d’épargne-invalidi

Payments from an RDSP – An Effort to Make it Understandable

Once again, I will try and do the impossible and explain the types of payments you can take out of an RDSP in a clear and understandable way.  For any of you who have been visiting this blog often and following the progression of the RDSP, you know that this is not an easy task.  The terminology and formula’s associated with payments from an RDSP often create confusion amongst people trying to learn about the plan.

So, wish me luck.

In this post I will refrain from using the official terminology of Disability Assistance Payments (DAPs) and Lifetime Disability Assistance Payments (LDAPs), and instead break down the different types of payments into 5 categories or scenarios.  I will define what I mean by the “10 year rule” for those of you who are unfamiliar.

Definitions

10 year rule = if you receive any payments from the federal government in the form of the grant or bond, you will need to wait at least 10 years after the last grant or bond has been received before you start withdrawing from the plan.  If you decide to withdraw before this ten year waiting period is up, you will have to pay back any grant or bond that has been received in the last ten years (not including interest).

Payment formula = some payments out of the RDSP must come out as determined by a formula.  This formula (simplified) is “Total Amount in the plan” / divided by “Years expected to live”.  ** Note that this is not the full formula, just a simplified version for clarity.

The Five Ways You Can Receive Payments:

1) No Federal Contributions: If someone opens up an RDSP and only contributes their own money into the plan (or the money contributed by friends and family) there are no restrictions on when you can withdraw from the plan or how much.  Once you turn 60 years of age, minimum annual payments will need to start coming out of the plan, but you are still allowed to take out as much as you want, whenever you want.  In this scenario you do not have to worry about the assistance holdback amount (or as we call it, the ten year rule).

Example – David decides that he will only put in his own money and deposits $15,000 at the age of 52.  David could withdraw payment from the RDSP at any time and in any amount.  At the age of 60, formula payments would begin coming out of the RDSP, but David could still take out larger amounts.

2) Annuity: If you would like to have even payments paid out over your lifetime, there is a provision in the legislation to allow for annuity payment.  An annuity is where you make a lump sum payment to a financial institution who then pays you income for the rest of your life.  In this case, you must still be conscious of the 10 year rule.

Example – Sarah’s family opened up an RDSP for her when she was 10 years old and contributed $1,500 every year.  Once Sarah turned 40, she wanted to receive the same amount in payments every year and took out an annuity from a life insurance company that pays her $7,000 a year.

3) More Personal Contributions than Federal Contributions: If you (and friends and family) have put in more contributions into your RDSP than the federal government, you are allowed to take out lump sum payments above and beyond the formula.  These lump sum payments will not start an annual payment and can be received before the age of 60.  Once you reach the age of 60, minimum payments as determined by the formula above will begin to come out annually, although you can still take out lump sums larger than the amount determined by the formula.  You will still need to take into account the 10 year rule for these payments.

Example – Katy and her friends were able to contribute $100,000 over 30 years by the time she was 45 and received $70,000 in federal Grant.  Katy decides at 45 that she wants to take out $30,000 towards a down payment on an apartment.  She withdraws the payment without causing an annual payment to occur.

4) Less Personal Contributions than Federal Contributions: If you have contributed less than the federal government into your RDSP, you can never take out payments that exceed the amount determined by the formula.  With this type of payment you must always take into account the 10 year rule.  Within this scenario there are three options:

• You wait until 60, at which point payments determined by the formula are paid out each year.
• You decide you want to start receiving payments before the age of 60, and you start the annual payments early.  Ex. John decides at 55 he wants to start receiving annual payments determined by the formula, and thus instigates these payments.
• You decide you want to receive a one-time payment that will not instigate annual payments (between the ages of 27 and 58).  Because you have contributed less than the federal government, you can take out a one-time payment but it cannot exceed the amount determined by the formula.

Example – Since he turned 19, Tim has only ever received the $20,000 in Federal Government Bond.  Tim decides at the age of 56 that he wants to start receiving payments from his RDSP.  At this point, payments as determined by the formula begin to come out every year.

5) Shortened Life Expectancy: If the person has a shortened life expectancy (within 5 years) the formual does not apply and they can take out payments of any size.  ** Must still adhere to the 10 year rule.

Example – Connie had an RDSP set up for her when she was 10 years old, and her parents have deposited $1,500 into her account every year for 10 years allowing her to get $35,000 in Grants.  At 30 years old, Connie finds out she has less than 5 years to live.  Her doctor certifies this diagnosis for the Canadian Revenue Agency, and Connie starts taking out payments of any size from the plan.

Important – It is up to the financial institutions as to whether they will allow lump sum payments (other than the formula payments) to come out of the plan.  It is important that you speak with your financial institution and make sure they allow you to take out these types of payments if this is how you want to use the RDSP.

The end.

Please let me know if this explanation is clear and understantable.  If it is not, I will keep trying until it is.  Thank you again to everyone for all your feedback.  I hope this has been helpful.