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Registered Disability Savings Plan (RDSP) Explained

Planning for the future financial security of individuals with disabilities is a priority for many families. The Registered Disability Savings Plan (RDSP) is a valuable tool that offers long-term financial security through tax-deferred savings and government contributions. If you or a loved one qualifies for the Disability Tax Credit (DTC), the RDSP can help build a financial cushion for future needs.

What is the RDSP?

The RDSP is a savings plan designed to help individuals with disabilities save for their long-term financial security. It is a tax-deferred account, which means the investments grow tax-free while inside the plan, though taxes may apply upon withdrawal. The RDSP offers government assistance through the Canada Disability Savings Grant and the Canada Disability Savings Bond, significantly boosting savings for those who qualify.

Key Features of RDSP

Tax-Deferred Growth: Investments grow without being taxed until withdrawn.
Government Contributions: Depending on family income, the Canadian government may contribute through matching grants and bonds.
Flexibility: Contributions can be made by the beneficiary, family, or friends.
Lifetime Contribution Limit: Up to $200,000 in contributions, with no annual limit.

Eligibility Criteria for RDSP

To be eligible for the RDSP, the beneficiary must:

Qualify for the Disability Tax Credit (DTC).
Be a Canadian resident with a valid Social Insurance Number (SIN).
Be under the age of 60 when the account is opened (contributions cease at 49 years old).

Government Contributions Explained

Canada Disability Savings Grant (CDSG): The government will match contributions up to 300%, 200%, or 100%, depending on the beneficiary’s family income and the contributions made. The federal government matches contributions to an RDSP based on family income of $108,861 or less (2025 threshold):

300% match on the first $500 contributed = $1,500
200% match on the next $1,000 = $2,000
Total potential annual grant: $3,500
Family income over $108,861: 100% match on the first $1,000 = $1,000

The maximum annual CDSG a beneficiary can receive is $3,500, and the lifetime maximum is $70,000. This grant is a powerful tool for enhancing your savings, as the government significantly boosts even modest contributions to the RDSP.

Canada Disability Savings Bond (CDSB) for 2025:

Designed to help low-income Canadians who may not be able to contribute themselves The family income of $37,028 or less (2025 threshold):

Receive $1,000/year with no contribution required
Family income between $37,028 and $53,359:
Receive a partial bond on a sliding scale
Lifetime CDSB limit: $20,000

Why Open an RDSP?

The RDSP is one of the most effective ways to save for individuals with disabilities, providing them with long-term financial security. By taking advantage of tax-deferred growth and government contributions, families can ensure that their loved ones have financial support when they need it most. The RDSP is one of the most powerful and underutilized savings tools in Canada for families and individuals living with disabilities. It offers:

Long-term financial growth
Tax advantages
Up to $90,000 in government contributions
Financial security for adulthood and retirement

By contributing early and consistently, even modest contributions can lead to substantial growth thanks to government support and tax-deferred compounding.

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