Welcome to the Registered Disability Savings Plan Blog
In 2007, Canada became the first country in the world to create a Registered Disability Savings Plan (RDSP). The RDSP will present families with a way to provide for the future financial security of their loved ones with disabilities. An estimated 500,000 people across Canada will benefit from this initiative, and future impacts of the RDSP go well beyond this simple planning tool.
This blog is intended to provide families across Canada with up-to-date information on the RDSP and a forum for discussion on the RDSP. To find out what is the RDSP? How do I qualify? and Where can I get it? visit www.rdsp.com As new developments occur, we will post the announcements here. The information you will find is meant as a resource for families to assist in learning more about the RDSP; however, this information does not replace the advice of a qualified professional and should be used as a reference tool only.
This is an interactive blog, meaning we encourage you to contribute with your own questions and comments related to the subject. We reserve the right to edit the content of any submissions, and to reject any comments we deem inappropriate. Please contact us if you have any concerns.
If you would like more information on the RDSP or access to more of our resources on a continual basis make sure to Join PLAN for free at www.rdsp.com. By Joining PLAN you will receive free e-publications and e-information on the RDSP on a monthly basis. It also provides additional benefits to you and your family, including; PLANfacts (PLAN’s newsletter), specially-produced Bulletins on the Registered Disability Savings Plan, Tax Tips for Families of People with Disabilities, Options for Home, an e-subscription to Abilities Magazine, and ActionPLAN (PLAN’s public policy ezine).
In addition, you’ll receive access to all PLAN workshops and seminars, including our newly developed tele-learning seminars and on-line courses.
To find out more about Planned Lifetime Advocacy Network (PLAN) you can visit www.plan.ca
This blog has been created thanks to the support of the Max Bell Foundation and the Law Foundation of BC.
39 comments
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June 28, 2008 at 11:40 am
bruce gallinger
If the beneficary of the plan is 58, are they excluded from the grant portion of the plan?
June 30, 2008 at 6:27 pm
Doug Brodhead
Hi Bruce,
Unfortunately the Grant and Bond are only available up until the persons 50th birthday, so someone who is 58 would be excluded from receiving the Grant portion of the plan. As well, I should mention that the beneficiary can only receive contributions into the plan until they turn 60.
October 20, 2008 at 11:02 pm
Stumped in Alberta
Where do you get a RDSP? Which banks offer them?
Do all banks have to offer them?
My bank was very rude to me when I asked about it.
I am in Alberta and my bank said oh that they may not even offer the RDSP and that maybe in 6months they may have something.
It seems they knew very little of the RDSP.
Alberta still hasn’t exempted the RDSP from disability pension programs like many other provinces.
Can anyone offer any help?
October 22, 2008 at 3:01 am
Doug Brodhead
Hi “Stumped in Alberta”,
The RDSP does not have to be offered by all Canadian financial institutions, and some will probably decide not to offer it as they are preoccupied with the launch of the “Tax-Free Savings Accounts” that are coming out in January.
What we have heard is that there will be around 5 financial institutions from across the country that will most likely be prepared to offer an RDSP to customers in December. Of these five, we know that at least one of these will be a national bank and that RDSPs should be available to any Canadian who wants, regardless of the province.
As well, there are 14-16 banks who should be offering the RDSP in the next year and have requested to the Federal Government that they are interested in becoming an issuer of the plan. It is common for many financial institutions to wait until a product actually becomes available before setting up there systems, so we think that a large number (other than the 14-16) will come on board after a year or two.
So, make sure to check with us before December 1st and we will have a list of financial institutions offering the plan posted on this blog.
In terms of Alberta’s treatment of the RDSP for those receiving disability pensions, we have received indication that most provinces will announce how they are going to treat the RDSP before December 1st. We know the Alberta government is aware of the RDSP and is supportive of the plan, and we will make sure to update the blog as soon as we are aware of how they are treating the plan. If you would like to encourage your local MPP to press for an exemption of the RDSP (asset and income), that is always a good way to get involved.
December 23, 2008 at 4:34 pm
Dave Nandi
There is a report in Toronto Star today [Dec 23rd] that RDSP for 2008 is being extended upto March 2009; is this correct?
January 22, 2009 at 6:45 pm
Doug Querns
I was reviewing the regulations with respect to the RDSP with respect to survivorship of the plan. The Regs talk about requiring the grant and bond portions being returned to the government in the event of death of the beneficiary. It doesn’t talk about contributions or income from the plan. Do you have any understanding of that?
Secondly, my son is 15 and I am trying to decide whether to wait until he turns 18 before contributing so that he is not subject to family income calculations and, therefore eligible for the higher matching. Any cmments?
January 24, 2009 at 12:17 am
Doug Brodhead
Hi Doug,
The requirement for the Grant and Bond portions of the RDSP to be paid back to Government if the beneficiary passes away only applies if the Grants and Bonds have been received within the last ten years. As soon as a Grant and Bond have been in the plan for ten years, they then become the asset of the beneficiary. For example, if you received the Grant and Bond for 20 years, waited 10 years, and sometime after that 30 year period passed on, all those Grants and Bonds would be considered the asset of the beneficiary (and would not have to be returned to the Government).
In the event of someone’s passing, the plan would be collapsed and the contributions, income, and any Government Grant and Bond which had been in the plan for more than 10 years, would be divvied out according to the beneficiary’s will. If the person was unable to draw a will, the assets from the plan would be divvied out according to the provincial estate laws that apply in each province.
As for your second question, it would depend on a few different factors. I would suggest you go on http://www.rdsp.com and play with the calculator and run through the scenarios. This will give you a better feel for potential options for contributing and setting up an RDSP.
January 31, 2009 at 7:34 am
Ryan M
I am wondering about about the the Conservative Party’s commitment during the last election to allow a RRSP’s/RRIF’s to be rollovered from a parent or grandparent into that of their child’s or grandchild’s RDSP upon the death of the parent/grandparent. I have heard nothing from the media regarding this in any of the recent Budget proprosals from the Conservative government. Has the government backtracked on their promise or are they planning to introduce it as a future proprosal? I just thought that the budget was the most appropriate time to include such ammendments to the RRSP/RRIF/RDSP regulations and their failure to do so right away worries me.
February 17, 2009 at 9:43 pm
Conni Scott
Introduction of the RDSP is a welcome initiative to provide a measure of security for our disabled son.
However it raises a legal issue that has yet to be addressed.
Should he die prior to depletion of RDSP benefits all remaining funds go to his estate. The RDSP, his only financial asset , has now created an estate for a profoundly retarded individual who has no choice but to die intestate.
I have submitted the following questions to Minister Flaherty January 12, 2009:
“Will families who have been appointed as Guardian of Property of the individual be able to act as Estate Trustee without filing a court application? If not, how do you propose that this area be addressed so contributors to the plan are assured that assets would be distributed fairly and unnecessary legal costs avoided?”
To date the only response has been the standard form letter reply that it will be brought to the Minister’s attention.
If anyone has been able to obtain any direction on this matter, I would certainly appreciate if the information could be shared.
February 23, 2009 at 3:41 am
Gavin Bamber
My money is invested and I make monthly withdrawals to cover my living expenses. If I moved this money to a RDSP, will I still be able to make my needed monthly withdrawals? Also, can I have a non-discretionary trust in a RDSP?
February 25, 2009 at 8:50 pm
Leslie Udell
Could you clarify a bit more about how someone can be considerd a “qualifying person” ,who can assist a person who is not contractually competent, to open an RDSP and also be listed as a plan holder? It is my understanding that being designated as a “qualifying person” is different from being legally declared as a decision maker. Are each of the banks going to be determining what criteria needs to be met to be a “qualifying person” or are the federal or provincial governments going to clarify this.
February 26, 2009 at 3:18 am
Doug Brodhead
Hi Leslie,
Glad to hear from you. In terms of the “qualifying person”, it will be dependent on the federal Income Tax Act definition of qualifying person and the provincial options around legal guardians/tutors/representative (different terms in many of the provinces). For the RDSP under the Income Tax Act, a “qualifying person” can be, for a minor, the legal parent, guardian, tutor, curator or other individual who is legally authorized to act on behalf of the beneficiary, or department, agency, or institution that is legally authorized to act on behalf of the beneficiary.
For an adult setting up an RDSP, a “qualifying person”, if they are not considered to be contractually competent, includes a guardian, tutor, curator, “or other individual who is legally authorized to act on behalf of the beneficiary”, or public department, agency, or institution that is legally authorized to act on behalf of the beneficiary.
This means that depending on the province, there may be the option to have a “individual who is legally authorized to act on behalf of the beneficiary” be the plan holder, such as Representatives in BC under the Representation Agreement Act. As there are limited options in some provinces, we are conducting some strategic inquiry into which options may address these issues, and will be updating everyone on this subject as soon as we get some clear answers. We know many people do not want to go the legal guardianship route, nor should they have too, just to set up an RDSP, so we will keep you posted. If you sign up for free at http://www.rdsp.com to get our information and updates regarding these and other issues, we will be delving into these options in more depth.
February 25, 2009 at 8:55 pm
Mark
Great blog and excellent information!
My question is: Can one roll an existing RESP that has been set up for the disabled child into a RDSP set up in that individuals name?
Looking forward to your reply.
Cheers!
Mark Huber
February 26, 2009 at 2:43 am
Doug Brodhead
Hi Mark,
We were hoping that this would be an option when the legislation rolled out for the RDSP, but unfortunately the RRSP and RESP rollovers were not included. The good news is that there were recommendations to allow for these rollovers to occur when it was initially pitched to the Feds. What we heard was that because the process of creating the systems to allow for the RRSP and RESP rollovers would have extended the launch of the RDSP by another 6 months to a year, it was decided that the focus should be on getting the RDSP up and running, and then work on potential opportunities for rollovers. Within the Conservative Platform during the last election the RRSP rollover was included, so I think there is an appetite to allow for them. We will keep everyone updated on this as we hear more.
February 26, 2009 at 3:01 am
Mark
Dear Doug:
Thanks for your detailed and quick response back!
Very much appreciated!
Cheers!
Mark Huber
March 17, 2009 at 8:50 pm
Jody Duffy
How does this saving plan affect individuals that may have to go into a care home, nursing home, or retirement homes? Most of these care homes etc base an individuals monthly rent/fee on their assets. If someone has an RDSP plan, can these homes use the value of the plan when calculating how much they should pay on a monthly bases?
March 20, 2009 at 5:41 pm
Doug Brodhead
Hi Jody,
We are currently conducting a scan of all these programs that are asset and income tested to make sure that an RDSP won’t affect your eligibility for them. We should have something together in the next few months so that people can make informed decisions when they set up an RDSP. Very good question.
March 25, 2009 at 5:09 pm
Carole
We established a Henson Trust which will expire in 2018. Has there been any analysis about whether it makes sense to start transferring monies from a Henson trust into RDSP? This would be in addition to the annual contribution we would make anyway to RDSP. I wondered if as we moved monies out of Henson into RDSP that it would somehow show up as our son’s asset during the transfer process.
March 25, 2009 at 5:17 pm
Bill
When I opened an RDSP in BC with Bank of Montreal for my adult son, I asked several times whether a copy of the representation agreement was required. I was told it was not. I know the government is really backlogged in processing RDSPs and I wanted to find out if a copy of the rep agreement should have gone with the initial application. If so, does anyone know where it should be sent? Thank you
March 25, 2009 at 7:09 pm
Doug Brodhead
Hi Bill,
Good question. You are not required to send a copy of your Representation Agreement (or any other evidence that you are someone’s legal representative) along with your documentation to the federal government. Some banks may ask to see your Representation Agreement or proof of legal representation before you set up a plan, but from what we have heard most are just verifying verbally with the individuals that there is something in place already (without having to show documents). So, not to worry, you did not have to send a copy along with your RDSP application.
March 26, 2009 at 4:25 am
Bill
Thanks Doug for such a quick response. The rep actually thought because I was a parent, it was ok. So glad I didn’t need to pursue it. Bill
May 14, 2009 at 2:02 am
Peter Siu
Is RDSP creditor proof? What would happen to the RDSP, contribution, grant and bond when there is a marriage break down and a split of asset is enforced?
May 15, 2009 at 4:36 pm
Doug Brodhead
Hi Peter,
When this initially came up in one of the meetings I attended, the response I heard was that the RDSP was not creditor proof, which is problematic because a withdrawal from the RDSP would instigate the 10 year rule, even if the withdrawal was minimal.
The other question I was recently asked was around the creditors of parent(s) trying to access a child’s RDSP. In this case, because the assets are considered to be those of the beneficiary, creditors would not be able to access funds in the child’s RDSP.
As I am not 100% certain on this question, I will follow up and confirm that this is correct and post shortly.
May 15, 2009 at 4:59 pm
Peter Siu
Hi Doug,
Thank you for the answers.
My second question was not meant for parents’ marriage breakdown but for the RDSP holder, the adult child himself or herself. A 50 or 60 years old person with $300,000.00 + cash and is single would attract questionable attentions.
Peter Siu
May 17, 2009 at 5:18 pm
Margaret Denton
Can we, the parent Accountholders, stop contributing at any time and have our Beneficiary wait 10 years before withdrawing (so as not to lose the government Grants and Bonds). Or, if we stop contributing, does the Beneficiary have to withdraw the lump sum immediately?
Also, if we stopped the program after, say, 15 years, is it then necessary to pay back the Grant and Bond for 5 years but not the Grants and Bonds received more than 10 years previously?
thank you for a reply.
May 19, 2009 at 12:01 am
Dan
At the suggestion of BMO the RDSP that I set up for my daughter specifies that I am the “account holder”. I know that this gives me control over how the funds are invested and how and when they are disbursed to my daughter who is the “beneficiary”. Now the question. If my daughter dies then, subject to the any refund the government is entitled to, does the balance in the fund revert to me [or my heirs] as owner of the account or must it be dealt with by my daughter’s will as beneficiary?
August 12, 2009 at 7:29 am
Marcy
Can the beneficiary start withdrawing from the plan after the 10 year waiting period has passed? My daughter (beneficiary) who is 27 years old wants to contribute for 10 years, do the 10 year wait, and then start withdrawing at age 47. Her contributions would be less than the grants received from the government.
August 12, 2009 at 5:53 pm
Doug Brodhead
Hi Marcy,
If your daughter wanted too, she could start withdrawing at the age of 47. It all depends on how much federal money she wants to have in her plan. For instance, in the scenario above, if she started to withdraw at the age of 47 she would have 10 years of Government Grant and/or Bond. If she decided to wait until the age of 57 before she started to withdraw, she would have 20 years of federal government contributions. If she (or friends and family), at the age of 47, had contributed less than the federal government, she would still be able to take out Lifetime Disability Assistance Payments at any time.
August 19, 2009 at 6:37 pm
Lillian
Hi Doug,
If someone was in their 50’s and did not qualify for the bonds/grants, what happens to their money in the RDSP once they turn 60? Do they have to take out ALL their money at that time or can they keep the account open until they are 83? After age 60, are they still allowed to put money into the RDSP account?
Thank you.
August 19, 2009 at 8:04 pm
Lillian
Hi Doug,
As a follow-up to my earlier request, I’ve done some exploring and this is what I’ve found out…
…no contributions after the person turns 60
…even with no federal contributions, the person once they turn 60 still needs to withdraw the required amount of money every year until age 83
Is this correct? If so, can the person without federal contributions after turning 60, still withdraw ANY amount of money provided it is more than the required annual amount?
Thank you!
August 20, 2009 at 9:52 pm
Doug Brodhead
Hi Lillian,
Our understanding of the payments is:
1) No contributions allowed once you turn 60;
2) Even with no federal contributions, once someone turns 60 LDAPs will automatically start to come out of the plan.
3) And yes, if someone has put in more than the federal government, they can withdraw lump sums even if they have reached 60+ and are receiving LDAPs.
August 24, 2009 at 7:10 pm
Pdit
Hi Doug
I am 44 years old, and have purchased a $1000. RDSP for myself. According to my estimations I will be eligible for a matching grant of $1000. from the gov. Am I correct in thinking that I am best to purchase one every year until and including I am 50 and then wait until I am 60 and receive payments, and am I correct in thinking that these payments not be taxable?
thanks
Pdit
September 10, 2009 at 4:45 pm
Doug Brodhead
Hi Pdit,
If you want to maximize the amount of money you receive in Grant from the Federal Government, it would be a good idea to put in $1,000 a year (I’m assuming that you have an annual income above the $77,664 mark, and are receiving the smaller $1 for $1 for the first $1,000). If your income is below $77,664, it would be good to try and put in $1,500 a year, which would get you $3,500 in Grant a year.
Funds in the plan are not taxable, but when they are withdrawn (payments) they are partially taxable. Any personal contributions put into your RDSP (including friends and family) is not taxable when withdrawn. But, any Grant and Bond received, and interest are taxable in the hands of the beneficiary.
August 29, 2009 at 4:01 am
Ryan
I have a question regarding the consequenses of the ten year rule and the collapse of the RDSP. Certain banks such as BMO allow individuals to invest in any of their mutual funds, including the riskier Equity and Index funds. These funds are supposed to be a good investment over a long time horizion, but not always as good in a short or medium one. As we have all seen in the last couple of years nothing is certain in the markets and some funds have lost and could easily lose approximately 50 per cent or more within one year. My question is what would happen if one decided to invest their own contributions plus the grant and bond in a mutual fund or funds that ended up losing a significant amount of money at the same time that their plan had to be collapsed because either the individual failied to qualify for the disability tax credit or worse passed away. Would the individual or the estate be responsible for any losses seeing as the plan could easily be worth less than even the government contributed to it?
September 10, 2009 at 5:50 pm
Doug Brodhead
Hi Ryan,
Our understanding of the legislation is that an individual or the estate would still be responsible for any losses incurred, even if it fell below the amount government had contributed in the first place.
October 9, 2009 at 1:59 pm
Peter Q.
I would like to advise all RDSP holders to CHECK YOUR MOST RECENT BANK STATEMENTS regarding the first grant and/or bond receipts.
My daughter’s plan was “undergranted” due to a bank error.
We contributed in February (for 2008 tax year) and again in early May (for 2009). When applying for the grants and bonds, the bank lumped both contributions as 2008. The result was that the grant was calculated at 300% for the first $500 (correct) and 200% on the balance (incorrect). By splitting the contributions over the 2 years, we should have been granted at 300% for each contribution.
In our case, the error will be corrected, but I think the onus will be on the customer to identify a similar problem to their RDSP issuer.
Just wanted to give everyone a “heads-up” in case the same situation has occurred to your account.
Best Regards
November 10, 2009 at 7:40 pm
Dennis Coates
I have been advised by RBC in NS that I must become a legal guardian to establish an RDSP for my son who has DS. Is this the same in other Canadian provinces? Seems wrong to ask parents to have their child stigmatized as incompetent to establish a plan for their benefit. After 18 years of support and love for a child what happens that causes us to become unacceptable as defacto guardians?
Dennis
November 11, 2009 at 12:11 am
Doug Brodhead
Hi Dennis,
You make a very good point. I think there are a large number of people across the country who are in your situation. This is an issue that was identified early on in the launch of the RDSP and has yet to be resolved. We have been working with the Federal Government, financial institutions, and other disability organizations to find a suitable solution, and I believe it will not be too long before we come up with something for families. We have been looking at several situations where a trustee of benefits can be appointed in a relatively informal and streamlined process. The processes protect people’s assets by assigning fiduciary responsibility. We will be keeping people updated as this progresses. In the meantime, it is always good to write a letter to your MP and outline the issue.
Click here to see our public policy update on this issue: Guardianship: A National Issue
Also
May 15, 2009 at 6:09 pm
Doug Brodhead
Hmmmm, I see your point. This leads me to wonder whether: a) it matters if the federal government has contributed more than the individual, b) if the individual has received more than the federal government and can only receive LDAP payments, would the spouse be eligible to receive a portion of that payment, c) Could the spouse force a payment to be withdrawn, even if it would cause a clawback of government benefits.
In the legislation, it does state that the payments from an RDSP can only be used for the benefit of the beneficiary, and that in no circumstance can this right be rescinded. But would this be enough (legally) to discourage the split of assets?
Let me do some research on this question, and I will post shortly once I have some more concrete answers for you.