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One of the most common questions I have been receiving lately is “can I transfer my RDSP from one bank to another?”.  Quick answer, Yes.  The legislation does allow for the RDSP to be transfered from one financial institution to another.

Does this mean I can go down to the bank and transfer right now?  Maybe. Maybe not.

Many people I have chatted with have said that they were told by their financial institution that transfers are currently not possible because there is no Government RDSP Transfer Form.  True, currently there is not a Government RDSP Transfer Form (although it will be ready by the end of February 2010), but the Government is capable of accepting transactions from financial organizations opening or closing RDSPs as a result of a transfer.

What does this mean?

It means that financial institutions can electronically submit information to the Government opening an RDSP and have the option to indicate it is part of a transfer.  Once this application is received, the RDSP would have the status of “pending” until the prior RDSP (from the old financial institution) has been closed, at which time the status would change to “registered”.  Note that the old RDSP must be closed within 120 days for the new one to be deemed “registered”.

Financial institutions can also submit an electronic request to close an RDSP, and can indicate that the closure reason is due to a “transfer”.

So why are most financial institutions saying they cannot transfer yet?

As many of you are probably aware, there have been some delays in completing the electronic system requirements around the RDSP, and many financial institutions started off by registering RDSPs manually.  Some financial institutions may not have the electronic systems currently in place to transfer and are waiting for the RDSP Transfer Forms from the Government to come out early this year (probably end of February 2010).

When the RDSP Transfer Forms come out early this year, this should allow all the financial institutions to transfer RDSPs across to another financial institution.  We will post an update when these forms come online.

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

Are you wondering why the income levels to receive the Grant and Bond have changed recently?  Every year these income levels will be indexed to account for inflation.  So, the income levels that receive the Grant and/or Bond for 2009, will be different than those receiving the Grant and/or Bond for 2010.

For those of you who are unfamiliar with how the income levels work, here is a quick refresher.  If you open an RDSP and want to receive money from the federal government, there are two options: the Canada Disability Savings Bond; and, the Canada Disability Savings Grant.  The Bond, designed for people who might not have much to contribute to an RDSP, is based completely on income and does not require any contributions.  The Grant, designed to encourage people to save, is based on how much you contribute into an RDSP, but will also look at your income to determine how much Grant you will receive.

So what are the new levels for 2010?

Canada Disability Savings Grant – If the beneficiary’s family income is less than or equal to $78,130, they are eligible for the full $3,500 in Grant.  If the beneficiary’s family income is more than $78,130, they are only eligible for the $1,000 in Grant.

Canada Disability Savings Bond – If the beneficiary’s family income is less than or equal to $21,947, they are eligible for the full $1,000 in Bond.  If the beneficiary’s family income is between $21,947 and $39,065, they are eligible to receive a pro-rated portion of the bond every year.

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