I receive other government benefits. Will my RDSP affect my eligibility or amounts I receive?
- It does not affect any federal benefits.
- It affects some provincial benefits, but not others.
Federal benefits like the Canada Pension Plan Disability Benefits (CPPD), Guaranteed Income Supplement (GIS), and Old Age Security (OAS) are not affected by an RDSP. They do not look at the funds in an RDSP when assessing your income.
Almost all provinces and territories have exempted the money in an RDSP, even when it is withdrawn. This means that you can still get income assistance and disability benefits while saving for your future. If you live in Quebec, New Brunswick, or Prince Edward Island, look at Provincial Resources-RDSP to see how your province treats money in an RDSP and money taken out. This will help you understand any impact.
For all benefits and programs, you should check directly with the organization who administers the benefit or program to see how the RDSP will affect the supports and services you get.
Receiving Canada Disability Savings Bonds
The Canada Disability Savings Bond is money that the government pays to people living with a disability on a low income. You can get up to $1,000 every year for up to 20 years. The amount you get depends on your family income.
Your financial institution will give you the application form for Canada Disability Savings Bonds at the same time you apply for the RDSP. You can also print the form and take it with you to your financial institution.
To qualify for the bonds, you must:
- Apply for the RDSP, be approved, and have your RDSP account open.
- Open the account when you are younger than 49 or before the end of the year you turn 49. You are only eligible for grants and bonds until the year you turn 49.
- Have a family income that is less than the threshold. This was $53,359 in 2023. You can get the current threshold amount from the Plan Institute’s website.
- File tax returns for each year that you were eligible for the Disability Tax Credit. You can catch up on any missed bonds that you were entitled to in the last 10 years.
- Keep filing your taxes. If you do not, the government will assume you have a high income and stop putting bonds in your account.
When you should expect to receive the Canada Disability Savings Bond
It takes about six weeks from when you have opened your RDSP and applied for the bonds to start receiving them.
If it has been three months and you have not received bonds that you are eligible for, contact your financial institution or Employment of Social Development Canada.
The first government deposit will catch up on any previous bonds you are eligible for plus the current year. After that, you will receive the bond once a year, automatically, as long as you file your taxes. This annual payment is usually made by the end of February.
Receiving Canada Disability Savings Grants
The Canada Disability Savings Grant is matching money that the government pays into your RDSP. It is meant to encourage you to save. For every $1 you put in, or someone puts in for you, the government may match with up to $3.
Your financial institution will give you the application form for Canada Disability Savings Grants at the same time you apply for the RDSP. You can also print the form and take it to your financial institution.
To qualify for the grant, you must:
- Apply for the RDSP, be approved, and open your account.
- Open the account when you are younger than 49 or before December 31 of the year you turn 49. You are only eligible for grants and bonds until the year you turn 49.
- File tax returns for each year that you were eligible for the Disability Tax Credit. You can catch up on any missed grants that you were entitled to in the last 10 years.
- Keep filing your taxes. If you do not, the government will assume you have a high income. That means you will get less matching money.
What you will get
The grant amount you will get depends on your family income and how much you put into your RDSP.
The family income threshold changes every year. The information below is for the year 2021. You can get the current threshold amount from the Plan Institute’s website.
If your family income is $106,717 or less:
- For the first $500 you put into your RDSP, you get $3 for every $1 you contribute.
- For the next $1,000 you put into your RDSP, you get $2 for every $1 you contribute.
- The most you can get in one year is $3,500.
- The lifetime maximum you can get is $70,000.
If your family income is more than $106,717:
- For the first $1,000 you put into your RDSP, you will get $1 for every $1 you contribute.
- You can get a maximum grant of $1,000 each year.
- The lifetime maximum is $70,000.
When you should expect to receive the grant money
It takes about six weeks from the date of a contribution to your RDSP for the government to deposit matching grants into your RDSP account.
If it has been three months and you have not received grants that you are eligible for, contact your financial institution or Employment of Social Development Canada.
Catching up on past grants and bonds
When you open an RDSP, you can catch up on any missed grants or bonds that you were entitled to in the last 10 years. You must still be within the calendar year, by December 31, of the year you turn 49 years old or younger to get these grants or bonds.
The government will put in a maximum of $10,500 in any one year for the grant, and up to $11,000 for the bonds. The way that they calculate the grants is quite complicated. Employment and Social Development Canada will give an ‘Annual Statement of Grant Entitlement’ each year between January and March. This will let you know how much money you need to deposit to get the maximum grant in any given year.
If you have just opened an RDSP, contact Employment and Social Development Canada to confirm how much grant entitlement you have for this year.
What you need to update
If you are the beneficiary of an RDSP, you should have a will. If you already have a will, you should update it after you open an RDSP. Your will says what happens to the remaining money in your RDSP after you are gone. Learn more from the Plan Institute on updating your will.
How to maintain your benefits
File your taxes every year. This tells the government how much in bonds and grants you are eligible to receive. Learn more from the Plan Institute on filing your income tax returns.
Set reminders for the year that your Disability Tax Credit expires. You can re-apply for the tax credit up to one year before it expires. Start early to make sure that you have lots of time to deal with any problems that come up with your new application.
Withdrawing money from your RDSP
Taxes
When you take money out of your RDSP, some of it is taxable:
- The amount that you have put in, or someone has contributed on your behalf, is not taxable.
- The amount that the government has put in for Canada Disability Savings Grants and Bonds is taxable.
- The investment income earned in the plan is taxable.
When you take out money, the financial institution will tell you how much is taxable based on these rules. You must declare this amount as income when you file your taxes for the year that it was taken out.
Minimum withdrawals after age 60
When you turn 60, you have to start taking out minimum withdrawals. These withdrawals are called Lifetime Disability Assistance Payments (LDAPs). The LDAP amount is based on a government formula. You can choose to begin LDAPs before you turn 60. But once you start, you must continue for life, or until all the RDSP is withdrawn.
One-time withdrawals
One-time withdrawals, if allowed by your financial institution, can occur any time. You may have to pay back some grants and bonds unless they have been in the account for longer than 10 years. There are also limits on the amount you can take out based on a set formula. Learn more from the Plan Institute on How Do You Get Your Money Out.