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Several reforms important to people with disabilities became law in mid-December when Bill C-47 (the last of the budget Bills) was passed by the Senate and given Royal Assent.

In his budget, Finance Minister Flaherty announced carry forward provisions for the Canada Disability Savings Grant and Bond as well as provisions for the rollover of RRSPs and RRIFs to the RDSPs of sons, daughters and grandchildren.

1.  Carry Forward Provisions for RDSP Grants and Bonds

Effective 2011, people’s Canada Disability Savings Grant and Bond entitlements can be carried forward.

When a person opens an RDSP, Canada Disability Savings Bond entitlements will automatically be calculated and paid into the plan for the preceding 10 years (but not before 2008, when the RDSP was launched).  This means people opening RDSPs in January, 2011 will can qualify (based on income) for up to $4,000 in Canada Disability Savings Bond – $1,000 for each of 2008, 2009, 2010 and 2011.

At the same time, the balances of unused CDSG entitlements will be determined for the same period. If contributions are made to the RDSP, Canada Disability Savings Grants will be paid on unused entitlements, up to an annual maximum of $10,500.  The matching rate on unused entitlements will be the same as if the contribution were made in that year.  In addition, contributions will be used against Grant entitlements at the highest rate first.

That means a contribution of $2,000 into a new RDSP in 2011 will result in a Canada Disability Savings Grant payment of $6,000 ($2,000 x 300%).  Combined with the Canada Disability Savings Bond, the result will be $10,000 from the federal government.

That’s equivalent to turning $2,000 into $12,000!  See table below:

Canada Disability Savings Bond $4,000
Contribution $2,000
Canada Disability Savings Grant $6,000
Total in RDSP $12,000

2.  RRSP/RRIF Rollover to a Registered Disability Savings Plan

The new provisions will permit parents and grandparents to rollover RRSPs and RRIFs, at death, to the RDSPs of financially dependent children and grandchildren, on a tax deferred basis.  A person is generally considered to be financially dependent if their income is below a specific threshold ($17,621 for 2010). A person whose income is above this amount may also be considered to be financially dependent if dependency can be demonstrated.

Normally any assets held in RRSPs and RRIFs become income in the year of the death.  When these assets are passed to the RDSP of a child or grandchild, the tax that would normally be payable is waived.

The amount of the rollover may not exceed the beneficiary’s available RDSP contribution room. That means as much as $200,000 can be rolled into a new RDSP.  If contributions have already been made then the amount will equal $200,000 minus previous contributions (This doesn’t include federal government contributions).

The rollover will count as contributions towards the beneficiary’s lifetime limit but will not be matched by Canada Disability Savings Grants. The rollover will be considered private contributions for the purpose of determining whether private or government contributions are greater. But because the rollover will not have been subject to income tax, it will be considered taxable when withdrawals are made.

The rollover is effective for deaths occurring on or after March 4, 2010. For deaths of an RRSP annuitant after 2007 and before 2011, special transitional rules will apply.


In the early days of the RDSP, a financially astute parent said, “If you want to maximize the benefit of the RDSP (and you have the cash to afford it), you should put $171,500 into the plan in the first year and then an additional $1,500 per year each of the next 29 years.”  It makes sense from a purely mathematical perspective.  In 30 years time (with an average annual return of 5.5%) the RDSP will be worth approximately $1,000,000.

This method maximizes the federal government contributions, it maximizes the tax savings and it takes advantage of provincial government rules that permit people on disability benefits to have an RDSP.  In other words it is useful from both a saving and an estate planning perspective.  But this scenario makes a couple of vital assumptions:

  • That you have $171,500, and
  • That your relative is already 18.

Recently, I had a conversation with an equally astute parent who added a third vital assumption to the list.  You have to be able to invest the $171,500 for a long period – nearly to thirty years.  He emphasized, “If you withdraw any amount before thirty years from the time you open the plan, you will have to repay some amount to the federal government.  While it’s money you wouldn’t have had anyway, most people are adverse to this idea.”

This is really important because a lot of families might be able to find that much cash but they would need to borrow against a home or cash in an RRSP or other asset.  That asset may represent their emergency cushion that they would use for themselves or their relative if something unforeseen arose.  That is, they cannot be sure that they can part with it for 30 years.

The significance of this latter point is that most families will find the RDSP useful either as a saving or an estate planning tool but not both.

As a saving tool, an investment of $30,000 over 20 years will net as much as $90,000 in Canada Disability Savings Grant and Bond from the federal government.  Thirty years from starting, the RDSP will be worth about $350,000 (with an average annual investment return of 5.5%).  That’s great.

As an estate planning tool, $200,000 contributed to a plan after the beneficiary turns 50 will not garner any federal contribution.  It will, however, earn income on a tax deferred basis.  And any amount can be withdrawn at any time without any penalties from the federal government. In most provinces, these withdrawals (of any amount) will have no impact on the beneficiary’s disability benefits.

So in summary, the RDSP is a great savings vehicle and it is a great estate planning tool but – unless you can part with your investment for the long haul, it does not serve both purposes at one time.

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

As many of you probably are aware, throughout our discussion we have consistently tried to provide a clear explanation of the type of payments that you are allowed to take out of an RDSP. To see what type of payments the plan allows, you can view the post Payments from an RDSP: An Effort to Make it Understandable.  In today’s post I want to highlight that although the legislation and regulations allows for all of these payments to be withdrawn from the plan, it only requires financial institutions to provide the formula payments (or Lifetime Disability Assistance Payments).  Again, a financial institution does not have to offer lump sum payments to come out of the plan if they do not want to.

This is why, in the post “Mapping your Plan“, we highlight the importance of running through with your financial advisor how you want to use the plan.  By doing so, you can find out then and there whether you are allowed to take out lump sum payments.  If you find out that they do not allow lump sum payments and you wanted to be able to take out lump sums, then you may want to look at another financial institution.  Currently the only bank which has verified that they allow all types of payments is the Royal Bank of Canada.  In all likelihood many of the other banks will most likely allow all types of payments but it will be important that you find this out when planning for your RDSP, as we have heard of a few financial institutions restricting lump sum payments.

This probably won’t be an issue for many people, as I expect a lot of people to simply take out the formula payments (lifetime disability assistance payments), but for those who are using the RDSP differently, you will want to verify this option.

Today, in a ceremony in Vancouver Al Etmanski the Co-Founder and President of Planned Lifetime Advocacy Network (PLAN) was named as a first torchbearer for the 2010 Paralympic Torch Relay.

“For its first Paralympic Torchbearer, RBC selected Al Etmanski, an author and co-founder of Planned Lifetime Advocacy Network (PLAN), which was instrumental in advocating for the new Registered Disability Savings Plan and assists families across Canada and globally in addressing the financial and social well-being of relatives with a disability.

Graham MacLachlan, regional president, RBC, British Columbia, said: “Al Etmanski has long demonstrated his commitment to helping people with disabilities and their families succeed through his work as an advocate and social entrepreneur. RBC is proud to select him as our first Paralympic Torchbearer on this historic relay.”

To view the press release in its entirety visit:

To apply to be a Paralympic torchbearer visit:

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

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.

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

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, and put “Scan Feedback, c/o Doug Brodhead” in the header”.

Thank you for all your support.

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 and browse.

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

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:

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

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

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

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

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.

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

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 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

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