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Registered Disability Savings Plans: A future of financial security

The Globe and Mail

If you or someone in your family is eligible for the Disability Tax Credit, there is a new registered savings program that you should know about: the Registered Disability Savings Plan (RDSP).



The RDSP was introduced by the Federal Government. This unique plan is designed to help Canadians to save and invest for themselves or a disabled family member in a tax-deferred environment.

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"The RDSP is a welcome addition to existing government programs designed to help ensure the long-term financial security for people with disabilities," said David Birkbeck, head, registered products strategy, RBC. "Our role at RBC is to help educate Canadians about how these plans work and to help those eligible get the most benefit."



Here's what you need to know to make the most of an RDSP:



Who can qualify

The beneficiary of an RDSP must be a resident of Canada with a Social Insurance Number, under age 60 and be eligible for the Disability Tax Credit (DTC). To qualify for the Disability Tax Credit, the individual must have a prolonged and severe impairment in physical or mental function, which is confirmed by a qualified medical practitioner and accepted by the Canada Revenue Agency (CRA).



Who can open an RDSP

The following people can open an RDSP:

  • A person with a disability, who is of the age of majority and has the legal capacity to manage his or her finances
  • The parent of a person with a disability who has not attained the age of majority
  • A guardian or other representative who is legally authorized to act on behalf of a person with a disability

Making contributions

Contributions to an RDSP are not tax deductible, but they grow within the plan on a tax-deferred basis. There is no annual contribution limit, but there is a lifetime limit for total contributions of $200,000. Contributions can be made up until the end of the year the beneficiary turns 59.

Government assistance

Contributions may be eligible for federal government matching grants (Canada Disability Savings Grant) up to $3,500 annually and the plan may be eligible for government bond amounts (Canada Disability Savings Bond) up to $1,000 annually. The money in an RDSP can be used for any purpose, as long as it is for the benefit of the plan's beneficiary.

Within Registered Disability Savings Plans, RBC clients will have access to a wide variety of investment options including RBC Funds, RBC GICs and RBC Savings Deposits. There will be no annual administration or withdrawal fees. Clients will also have the opportunity to make regular, pre-authorized contributions through RDSP-Maticâ„¢.

RBC has also joined forces with Planned Lifetime Advocacy Network (PLAN), a non-profit organization which led the advocacy for the creation of the Registered Disability Savings Plan, to help educate and offer advice to Canadians. As PLAN's preferred national RDSP provider, RBC is working closely with PLAN to assist Canadians with disabilities and their families.

For more information please visit: www.rbc.com/rdsp.

For more information on Planned Lifetime Advocacy Network (PLAN) or for more about RDSPs please visit: www.plan.ca or www.rdsp.com.

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