Registered Disability Savings Plan
The Registered Disability Savings Plan, or RDSP, is a registered savings plan to which annual contributions can be made. The amounts grow tax free within the account, but are taxable upon withdrawal of the funds. It allows for family, caregivers, or others to establish a savings account to ensure the disabled individual has long term financial security.
There are some conditions on who can be the beneficiary of an RDSP. The individual must:
- Be eligible for the disability tax credit.
- Have a valid SIN number
- Be a resident of Canada when the plan is opened
- Must be under the age of 60
According to the Government of Canada,
A person is eligible for the DTC only if a licensed medical doctor certifies that the individual has a severe and prolonged impairment in physical or mental functions. This form must also be approved by the Canada Revenue Agency (CRA) and the person must be deemed to be eligible for the disability tax credit.
Anyone can contribute to the RDSP with written permission of the plan holder. The RDSP can be a valuable tool for the families of disabled individuals when looking to the future of their loved ones. You can read all about the rules, and how to establish and RDSP here.