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HomePersonal BankingWealth ManagementSmall BusinessCommercialCorporate & InstitutionalAbout BMO

What is an RDSP?

A Registered Disability Savings Plan (RDSP) offers benefits that are too good to ignore. Created by the federal government, the RDSP provides people with disabilities with an easy and effective way to save and invest for their long-term financial security. What's more, the government offers incentives in the form of grants and bonds to help you accumulate more. If you are a person with a disability or provide care to someone with a disability, you'll definitely want to know more about RDSPs.

How Can a Disability Savings Plan Help?

RDSPs have three important advantages over other savings plans:

  1. As a registered savings plan, earnings grow tax-free until money is withdrawn. This means RDSP contributions can grow faster, helping to accumulate more in the plan.
  2. RDSPs may be eligible for government incentives of up to an annual amount of $3,500 to a lifetime maximum of $70,000 in grants and an annual amount of $1,000 to a lifetime maximum of $20,000 in bonds, which can substantially boost an RDSP's value.
  3. Income payments from RDSPs do not affect income-tested federal government programs, including Old Age Security, the Guaranteed Income Supplement and the Canada Pension Plan. In most provinces and territories, you will still qualify for existing provincial social assistance programs if you have an RDSP.

Who can take advantage of an RDSP?

Anyone who is eligible for the Disability Tax Credit may be the beneficiary of an RDSP. To qualify, the beneficiary must:

  • Be a Canadian resident.
  • Have a valid Social Insurance Number.
  • Be under the age of 60.
  • Complete a Disability Tax Credit Certificate (Canada Revenue Agency Form T2201) with the assistance of a qualified practitioner and receive notification of approval from the Canada Revenue Agency.

Who Can Contribute?

Anyone can contribute to an RDSP as long as they have written permission from the account holder. There is no annual limit on contributions and the lifetime maximum is $200,000. However, contributions must cease by the end of the year in which the beneficiary reaches age 59, no longer lives in Canada, no longer qualifies for the Disability Tax Credit, or when the beneficiary dies. Consider making automatic RDSP contributions at regular intervals throughout the year – you will find it easier on your budget and a convenient way to reach your target annual contribution amount before the December 31st deadline each year. Keep in mind that the sooner your money is invested in an RDSP, the longer it has to grow tax-deferred.


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