The RDSP is the most generous savings plan in Canada, and the least used. Roughly two-thirds of the people eligible for one do not have it.
There is a reason for that. Banks rarely promote it, the paperwork is unfamiliar, and until recently no life insurance company offered one at all. Empire Life changed that, which is why I am able to open them.
If someone in your family is approved for the Disability Tax Credit, this is very likely the single best financial decision available to you.
How much the government actually puts in
This is not a modest top-up. It is the highest matching rate in the Canadian system.
The Canada Disability Savings Grant matches your contributions at up to 300%, depending on family net income. For families under the income threshold, the first $500 you contribute is matched three-to-one, and the next $1,000 is matched two-to-one. That is $3,500 of grant on a $1,500 contribution, in a single year. The lifetime maximum is $70,000.
The Canada Disability Savings Bond pays up to $1,000 per year to lower-income families with no contribution required at all, to a lifetime maximum of $20,000. If your family qualifies and you simply open the plan and do nothing else, money still arrives.
The income thresholds are indexed each year, so the exact figures move. I will check where your family falls before we open anything.
You can go back ten years
Unused grant and bond entitlement carries forward for 10 years. This is the part that changes people’s situations materially.
If the beneficiary has been approved for the Disability Tax Credit for several years but never had an RDSP, that entitlement has been quietly accumulating. In a single catch-up year you can collect up to $10,500 in grant and $11,000 in bond.
I have sat with families who opened a plan and received more in the first year than they had managed to save in a decade. If a diagnosis was made years ago and nobody ever mentioned an RDSP, please come and see me — this is the case where the numbers are largest.
Who qualifies
- The beneficiary must be approved for the Disability Tax Credit.
- They must be a resident of Canada with a valid Social Insurance Number.
- The plan must be opened before the end of the year the beneficiary turns 59. Grants and bonds are only paid up to the end of the year they turn 49, so opening earlier matters a great deal.
If the Disability Tax Credit has not been applied for yet, that is the first step and it comes before anything else. It is a form completed with a medical practitioner, and approval can be backdated — which in turn can unlock backdated RDSP entitlement.
The rules worth knowing before you open one
The lifetime contribution limit is $200,000. There is no annual limit, so contributions can be uneven — useful for families whose income varies.
Contributions are not tax deductible, but growth is tax-sheltered. When money comes out, your own contributions are not taxed; grants, bonds and growth are taxed in the beneficiary’s hands, which is usually a low rate.
The ten-year rule. If money is withdrawn within ten years of the last grant or bond payment, some of that government money has to be repaid. An RDSP is a long-horizon plan and should be treated as one. This is the rule that catches families out, and I go through it carefully before anyone signs.
RDSP assets generally do not affect provincial disability benefits in Ontario, which is a common and understandable worry. This is worth confirming for your specific circumstances, and I will raise it rather than wait to be asked.
Why an insurance-company RDSP
Empire Life offers the RDSP as a segregated fund contract, which brings the maturity and death benefit guarantees and the named beneficiary structure described elsewhere on this site.
For an RDSP that structure carries real weight. These plans exist to support someone who may need support for a long time, often after their parents are gone. Being able to name where the money goes, and having it settle without probate, is not an abstraction for these families. It is usually the reason they came in.
Common questions
My child was approved for the DTC five years ago. Have we lost that?
Almost certainly not. Entitlement carries forward for ten years. Bring the approval date and I will calculate what is still available.
Can grandparents or other relatives contribute?
Yes, with the plan holder’s written consent. Contributions from anyone count toward the same $200,000 lifetime limit.
What happens when the beneficiary turns 60?
Regular payments, called Lifetime Disability Assistance Payments, must begin by the end of the year they turn 60 and continue for life.
Who controls the plan?
If the beneficiary is a minor, a parent or guardian is the plan holder. Adults can usually hold their own plan; where capacity is a question, there are provincial rules about who may act, and I will walk you through them.
What if the beneficiary dies?
The plan is closed and grants and bonds paid in the previous ten years are repaid to the government. The remainder goes to the estate, or to the named beneficiary under a segregated fund contract.
Does an RDSP affect ODSP?
RDSP assets are generally exempt for Ontario Disability Support Program purposes. Confirm your own situation with me before relying on it.
Families opening an RDSP often also need life insurance structured to support the beneficiary long-term. See all savings and investment options.
If someone in your family has the Disability Tax Credit and no RDSP, there is very likely thousands of dollars in unclaimed grant and bond waiting. Book a 15-minute conversation and I will work out exactly how much.