Registered Disability Savings Plan (RDSP)

Use this form to enter or update the holder, beneficiary and other properties of a Registered Disability Savings Plan (RDSP).

RDSPs require detailed contribution, income, grant and bond information. The Review and edit accounts page shows a summary, but changes to these details must be made through Edit full details.

An RDSP is intended to provide long-term savings for a person who qualifies for the Disability Tax Credit (DTC). There can be only one RDSP for a beneficiary, although the plan can contain contributions from several people.

Contributions are not tax-deductible, but investment growth is not taxed while it remains in the account. Depending on the beneficiary’s family income and contributions, the account may receive Canada Disability Savings Grants and Canada Disability Savings Bonds.

The TIME MACHINE uses the information entered here and on the following contribution-history screen to calculate future contributions, grants, bonds and withdrawals.

The holder is the person who opens and manages the RDSP. The holder and beneficiary are not necessarily the same person.

An adult beneficiary who is able to manage the plan may be its holder. A parent, grandparent or another qualifying person may instead be the holder. The MoneyReady App allows the holder to be you, your spouse, both spouses jointly or Other.

Select Other when the holder is someone who is not otherwise represented in the application, such as the beneficiary’s parent or grandparent.

The beneficiary is the person with the disability for whom the RDSP was established. The beneficiary must be eligible for the Disability Tax Credit.

Before editing the RDSP, identify the DTC eligibility in your PROFILE, your spouse’s PROFILE or the applicable PERSON AT CHARGE. Only people identified as having a disability will be offered as possible RDSP beneficiaries.

The holder shown on the Review and edit accounts page is not the beneficiary. Both selections should be reviewed carefully.

Enter the date on which the beneficiary first qualified for the DTC. The TIME MACHINE uses this date when determining whether unused grant and bond entitlements from earlier years may be available.

The eligibility date cannot be after the RDSP opening date or before the beneficiary’s birthdate.

Enter the date the RDSP was or will be opened. The date can be in the future, but the account cannot open before the beneficiary became eligible for the DTC.

The RDSP must be opened before the end of the year in which the beneficiary turns 59. If a date before the beneficiary’s birthdate is entered, the application will correct it to the birthdate.

If you change the opening date, the dates of linked AUTOMATIC SAVINGS/WITHDRAWALS may be adjusted. Review any warnings displayed after saving.

Enter the age at which Lifetime Disability Assistance Payments (LDAPs) should begin. These are recurring payments intended to continue for the beneficiary’s lifetime.

The age cannot be greater than 60. The TIME MACHINE will calculate the annual LDAP amount using the beneficiary’s age, the RDSP balance and the applicable payment rules.

Select whether the RDSP permits Disability Assistance Payments (DAPs) in addition to lifetime payments.

A DAP is a one-time or occasional withdrawal. If this option is not selected, the TIME MACHINE will generally prevent withdrawals before the selected LDAP starting age.

DAPs may require recently received grants and bonds to be repaid. The TIME MACHINE applies the assistance holdback and proportional repayment rules. It will limit a withdrawal when necessary and may repay up to three dollars of recent grants and bonds for each dollar withdrawn, limited by the applicable holdback amount.

After saving this form, you may continue to another screen for the RDSP’s previous income and contribution history. This information is needed to calculate grant and bond entitlements, including possible carry-forward amounts.

For each year shown, enter:

• the family income used for RDSP grant and bond calculations, which is generally the income from two years earlier; and
• the contribution made to the RDSP during that year.

For an older account, you may instead be asked for cumulative contributions, grants and bonds up to the specified earlier year, followed by annual information for the more recent years.

If the current year’s grants or bonds have already been deposited into the real RDSP, check the applicable box so that the TIME MACHINE does not add them again.

Review the RDSP at the beginning of every calendar year and whenever a contribution, grant, bond or withdrawal occurs. In particular, keep the current year’s contribution and the indication that grants or bonds have already been deposited up to date.

The Accounts needing yearly review filter on the Review and edit accounts page can help you find all RDSPs requiring this update.

You can make planned contributions through AUTOMATIC SAVINGS or your deposit PRIORITIES. The TIME MACHINE applies the contribution limits supported by the application and calculates the grants and bonds based on the beneficiary’s recorded income history.

Actual eligibility can depend on information not available to the MoneyReady App. Compare the projected grants and bonds with information from the plan administrator and the Government of Canada.

An RDSP withdrawal can contain original contributions, grants, bonds and investment growth. The original contributions are treated as non-taxable, while the grants, bonds and growth are treated as taxable income of the beneficiary.

The TIME MACHINE separates the taxable and non-taxable portions and considers any required repayment of recent grants and bonds.

You can correct or change the RDSP holder. Changing the holder may affect entries associated with the account, so review your AUTOMATIC SAVINGS/WITHDRAWALS and your deposit and withdrawal PRIORITIES afterward.

Changing the beneficiary is a more substantial change because an individual can have only one RDSP and the contribution, grant and bond history belongs to that beneficiary. Carefully review the following contribution-history screen after making such a change.

This field is shown only when the growth rate of the RDSP’s Cash investment has not yet been entered. This commonly occurs with newly imported Wealthica accounts.

To change an existing Cash growth rate or the value and growth assumptions of other investments, select Edit investments.

Select Save and continue to validate the RDSP properties and continue to its previous income and contribution history. Complete that screen before proceeding to the account’s investments.

RDSP calculations are complicated. Consult the RDSP section of the MoneyReady App eBook for a more complete explanation of the financial rules and their treatment in the TIME MACHINE.