A Registered Disability Savings Plan (RDSP) can be a great way for a family to secure the financial future for individuals with disabilities. These plans are offered in Canada and are designed to help the beneficiaries save for long-term needs like education, housing, and recreation. They offer grants and bonds that grow tax free over time, which makes them an attractive option for financial planning. Not only do RDSPs have potential to build wealth and increase independence, they also provide peace of mind knowing that your loved one’s future is secure.
What is an RDSP & How Does it Work?
A Registered Disability Savings Plan (RDSP) is a specialized savings plan that allows individuals with disabilities to save and invest long-term. The RDSP is designed to help individuals with disabilities build financial security and enhance their quality of life.
Here’s How the RDSP Works:
- Opening an RDSP – Opening an RDSP is simple and accessible. Our team of experienced investment representatives can help you begin the process and guide you through the required steps and forms.
- Eligibility Criteria – To be eligible for an RDSP, individuals must qualify for the Disability Tax Credit (DTC) certificate issued by the Canada Revenue Agency (CRA). The DTC certifies that you have a severe and prolonged impairment in physical or mental functions.
- Contributions – Contributions to an RDSP can be made by the plan holder, family members, or even friends. While there is no maximum annual contribution limit, the lifetime maximum contribution limit is $200,000.
- RDSP Grants and Bonds – One of the most significant benefits of an RDSP is the potential to receive government grants and bonds. Depending on the family income and contributions, individuals may be eligible for Canada Disability Savings Grants (CDSGs) and Canada Disability Savings Bonds (CDSBs). These incentives can significantly boost the growth of your RDSP.
- RDSP Withdrawals – The primary purpose of an RDSP is to provide long-term financial security. Withdrawals from an RDSP, known as Lifetime Disability Assistance Payments (LDAPs), can be made as early as age 60. These payments are taxable in the hands of the beneficiary, typically at a lower tax rate, as individuals with disabilities often have lower incomes.
Receive Matching Grants
Many people are eligible for grants and bonds from the federal government, allowing your contributions to go further.
Like an RESP, the plan allows invested funds to defer taxes until withdrawal. These funds are protected from creditors and can be used for anything the individual needs.
Approach the Future with Confidence
Planning ahead will allow you to achieve financial security for the loved ones in your life.
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