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Reminder: if you are new to this blog and want a detailed description of the RDSP please click on the header under “RDSP FactSheet” or refer to the September post entitled “Review of the Registered Disability Savings Plan”.

One of our regular commentators on this blog asked a really good question that I am beginning to hear more and more.  “In light of the global economic crisis and speculations of a possible recession in Canada, will there be an impact on the launch of the RDSP or on the RDSP itself?”

As I mentioned before, the answer to this question is no (but let me expand on this).  The unique thing about the RDSP is that it requires a few major players to ensure its successful launch in December.  These players are the Federal Government, Provincial Governments, Financial Institutions, and community organizations.  

So what is each players role in this process and how does the financial crisis affect their involvement with the RDSP?

First, the federal government passed the Canada Disability Savings Act, amended the Income Tax Act, and prepared the Budget and Economic Statement Implementation Act, 2007, which will come into affect on December 1st, 2008.  The Federal Government has also prepared agreements for Financial Institutions who are interested in issuing RDSPs.  It looks like the Federal Government is on track to reach the December 1st launch date and that the economic crisis will not affect the Federal launch of the RDSP.

The provincial governments are an important piece of the puzzle because, for those receiving Disability Benefits from their province, it will be essential that their provincial government exempts the RDSP from affecting any income or assets tests.  Currently, BC, Newfoundland, Yukon and Saskatchewan have all fully exempted the RDSP from affecting Disability Benefits.  We have heard that most of the provinces will be announcing their treament of the RDSP on Disability Benefits before the December 1st launch, but it will be important for people to be aware of how their province treats the RDSP before they set one up (check this blog for updates).  For most provinces to accomodate the RDSP simply requires a amendment/addition to the provincial income assistance/disability assistance regulations, and therefore we expect all the provinces to have announced their treatment of the RDSP by December of this year.  Although the financial crisis might distract  and delay a few provincial governments from making an announcement on the RDSP, we expect that most if not all provinces will make this accomodation to their regulations in time for the launch. 

When it comes to financial institutions and the RDSP, the financial crisis should not be too much of a concern.  We have heard that there are between 14-16 financial institutions across the country that expressed an interest in issuing the RDSP and that this number would grow in the first year.  With the financial crisis creating uncertainty and the Tax-Free Savings Account becoming available in January, most financial institutions do have a lot on their agenda, but we have received indications that some financial institutions will be ready for the start date in December.  As soon as this information becomes public we will be posting the list of financial institutions offering the plan, and provide comparisons for the types of plan that each is providing.

Community organizations are going to be important when it comes to communications and outreach around the RDSP.  As the Tax-Free Savings Account will be taking up much of the outreach resources of financial institutions and we expect their to be limited communications to consumers, it will be extremely important for community groups and governments to spread the word and provide information for those who may be able to take advantage of the RDSP.  The federal government will be doing some communications and outreach on the RDSP, but to reach everyone who is eligible will require the efforts of all those involved.

We will continue to keep you posted on what is happening with the financial institutions in preparation for the roll-out in December of this year.  Make sure to regularly check our blog for these updates.


Reminder: if you are new to this blog and want a detailed description of the RDSP please click on the header under “RDSP FactSheet” or refer to the September post entitled “Review of the Registered Disability Savings Plan”.

One of the most frequent questions I get asked when speaking with families about the RDSP is “what is this ten year rule around withdrawals”.  Many of you have probably come across this particular characteristic of the plan and wondered exactly what it means for your longterm strategy when creating a plan for the RDSP.  This Ten Year Rule seems to be a provision within the plan which has the most amount of confusion surrounding it.

First, I will just mention that although the Ten Year Rule does mean there a certain restrictions to withdrawing (if you have received any Grant and Bond), the benefits of setting up a plan are far greater and the Ten Year Rule should be considered when planning for your future, but should not deter you from setting up a plan.

Second, if you set up an RDSP and decide you DO NOT want to receive the Canada Disability Savings Grant and the Canada Disability Savings Bond, the Ten Year Rule does NOT apply to you.  If you only receive family and friends contributions into the plan you will have no restrictions as to when you may withdraw from the plan.

So, what exaclty is this Ten Year Rule?

If you have received any Grant and Bond from the Government you will have to wait ten years after the last Grant and Bond is received before you withdraw from the plan.  If you decide to withdraw before this ten year waiting period is over, you will receive a penalty.  This penalty is, any Grant and Bond received within the last ten years of a withdrawal will have to be paid back to the Federal Government.  An easier way of understanding this is: “if you withdraw from the plan, look back ten years from the date of withdrawal and if there is any Grant and Bond received within those ten years it will have to be paid back to Government.”  This will not include the interest from the Grant and Bond or family and friends contributions, only the Grant and Bonds themselves.  Once a Grant and Bond has been in your plan for ten years, it then becomes the asset of the beneficiary and will not be taken back.

For example, if John sets up a plan at the age of 20 and contributes and receives the Grant and Bond for 20 years, he will have to wait until he is 50 before he begins withdrawing from the plan (without penalty).  If, for example, he decided he wanted to make a withdrawal at the age of 40 (having received the Grant and Bond between the ages of 20 and 40 years of age), he would have to pay back any Grant and Bond received between the ages of 30 and 40).

Can you specify which portion of the plan you withdraw from?

Unlike the Registered Education Savings Plan, you cannot specify which portion of the plan you are withdrawing from the RDSP.  Every dollar coming out of the RDSP is considered to be made of 3 parts: 1) Family and Friend Contributions, 2) Government Contributions (Grant and Bond), and 3) Interest.  

Why put in the Ten Year Rule?

The Ten Year Rule was put in place by the Federal Government to ensure two things: a) that the plan remained a longterm savings plan, and b) that there would not be any “tax slippage”.  

The Federal Government will most likely be reviewing this characterictic of the plan when they conduct their 3 year review of the RDSP, as many families have brought it forth as an issue.

The RDSP Calculator (click here) does take the Ten Year Rule into account when processing your individual situation, so make sure to run a few different scenarios on the RDSP Calculator.

The Canadian Association for Community Living has recently come out with a “disability-specific” analysis of the various election platforms of the parties running in the federal election.  This includes mention of the potential for a RRSP rollover into the RDSP, and making the Disability Tax Credit refundable for low income Canadians.

The Voice of Persons with Disabilities is Being Heard – The Canadian Association for Community Living is pleased that all party platforms have made commitments on disability issues. It is clear that the voice of the community is having impact and being heard. In addition to explicit party commitments in platforms, it is also important to keep in mind the recent (May 2008) all-party motion that was passed unanimously by the House of Commons supporting ratification of the UN Convention on the Rights of Persons with Disabilities.

The following provides a disability analysis of Federal election platforms for the Conservative Party of Canada, the Liberal Party, the New Democrat Party and the Green Party of Canada.

The analysis uses the three issues CACL identified as election priorities as the benchmarks for reviewing party platforms. The three issues are: poverty, the UN Convention on the Rights of Persons with Disabilities, and inclusive and accessible communities”

If you would like to read more please click on this link:

Laura Mackenrot, a disability advocate from BC recently wrote an article for the BC Coalition of People with Disabilities (BCCPD) on the RDSP that was very interesting and really pinpoints the important characteristics of the plan.  She herself is eligible for the RDSP and will be signing up for the plan when it becomes available in December.  Her description of how she will use the plan to really accumulate a significant amount of savings is a really good example of how a modest investment can result in a impressive return.  

“An important feature of the RDSP is that the Ministry of Housing and Social Development will not classify it as an asset. If you are receiving the Persons With Disabilities (PWD) benefit from the provincial government, you will be permitted to save over $3,000 if it is invested in an RDSP. This means you do not have to worry when the amount exceeds the $3,000 limit that is currently placed on those receiving PWD. As well, money held in an RDSP will not affect the application process if you are applying for PWD or any other government assistance program.

Personally, I will be using my added part-time income to contribute $125 a month into the plan to maximize my investment for retirement. If I do this for 33 years, and don’t take any money out before I turn 60, then I should have $870,000 if I choose mutual funds with an average growth rate of 8%.”

To read the article in its entirety visit:

If anyone is looking for additional information about the RDSP there is another resource which I thought I would mention.  Planned Lifetime Advocacy Network (PLAN) conducts free RDSP telelearning seminars on a tri-monthly basis.  The telelearning seminars will give you a good understanding of the potential of the RDSP and how your family might use it and let you know what work needs to be done (federally and provincially).  

Topics that we discuss within the seminar include: Elements of the Disability Savings Plan; Comparisons with RRSPs and RESPs; the Disability Tax Credit; Opening and Directing an RDSP; Contributions; the Canadian Disability Savings Grant and Bond; the “10 Year Rule”; Taxation; Scenarios; Federal Implications; Provincial Implications; RDSP vs. Trusts; Getting Ready for the RDSP; and “Keeping Informed”.

The goal of the telelearning seminars is to really give people a thorough understanding of the RDSP so that they can make financial decisions knowing all the things that need to be considered when opening an RDSP.  We have question-periods throughout the seminar, if you have any related questions around the presentation or details around the RDSP.

If you would like to participate in a free telelearning seminar you can visit and look under “Resources”, click on “Workshops and Seminars” and you will see the next available dates for the telelearning seminar, or call Planned Lifetime Advocacy Network (PLAN) at 604-439-9566.  

The RDSP telelearning seminar is accessible from anywhere in Canada and uses a toll-free number for participants to call in.

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