How RDSPs work

The Registered Disability Savings PlanRegistered Disability Savings Plan A savings plan that allows people with disabilities and their families to save for the future. Government grants add to your savings and your investments grow tax-free.+ read full definition (RDSPRDSP See Registered Disability Savings Plan.+ read full definition) was established to help parents and others save for the long-termTerm The period of time that a contract covers. Also, the period of time that an investment pays a set rate of interest.+ read full definition financial security of a disabled person (one who qualifies for the Disability Tax Credit).

The beneficiaryBeneficiary The person(s), institution, trustee or estate you choose to give money, property or other benefits when you die. You may name beneficiaries in your will, insurance policy, retirement plan, annuity, trust or other contracts.+ read full definition of an RDSP can continue to receive federal and provincial disability benefits.

8 things to know about RDSPs

  1. The beneficiary is the person with the disability who will receive the money in the future.
  2. The plan holder is the person who opens and manages the RDSP. The beneficiary can also be the plan holder.
  3. There is no annual limit on contributions but the lifetime contributionContribution Money that you put into a savings or investment plan.+ read full definition limit for a beneficiary is $200,000.
  4. Contributions can be made to the plan until the beneficiary turns 59.
  5. Contributions are not taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition deductible, but your savings grow tax free. There is no tax on the investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition earningsEarnings For companies, it’s the money they make and share with their shareholders. For investors, it’s the money they make from their investments.+ read full definition, as long as they stay in the plan.
  6. Until age 49, the beneficiary may be eligible for government contributions to the RDSP under the
  7. RDSP savings can be held in a variety of investments, depending on where the plan is opened.
  8. The beneficiary must start taking regular payments from the plan by age 60.

Learn more about how RDSPs work.

3 key points

  1. Savings grow tax free in the plan
  2. The government makes contributions
  3. You can still get disability benefits
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