If I am currently 49 years old (Birthday in July) does it make any difference whether I open a RDSP or a simple RRSP to save for the future? From all my reading I believe I wouldn’t be entitled to any grants given my age. Any suggestions?

can i make monthly withdrawals from the RDSP and not have my monthly social assistance payment reduced ?

There has been a recent change to the RDSP. It used to be the government grant portion had an annual limit with no possibility of carrying forward previous years’ grants. That has recently changed so that someone today can make a contribution for 2008 through to 2011 and receive the maximum grant possible, as though they were actually making those contributions in 2008 and so on. The question I have is a practical one. How does the financial institution ensure that the monies contributed today are treated as though it was contributed in, say, 2008 or 2009 so that people can get grant money from previous years. And, on the other hand, if someone would prefer that the money be treated as only a 2011 contribution, how do they ensure that? They may want to pick the year based on their income from that year as their taxable income affects the amount of grant they can achieve. If they just turned 18, they may want the contribution treated as a 2011 contribution so the grant is based on their own income and not their family income.

Thanks.
Ted Norton
613-781-2655

My son turned 14 this year. If we start an RDSP for him this year, he will not receive the maximum govenment grant/bond because our family income will be over the threshold. Will he still receive the maximum total grant/bond eventually, only it will take longer because he isn’t maxing it while he is still a dependent? Or is that additional government contribution simply lost and we should wait until the government contributions are based solely on his income before starting his RDSP?

What happens to the money in my RDSP if I die before being able to take anything out.

At age 65, when calculating GIS income are withdrawals from an RDSP exempt as income ?

Are there answers to the above questions anywhere?
I have some similair questions about the RDSP.

Hi Robin
I just posted on the question of when to start on the RDSP or on my site, here: http://www.jackstyan.com/my-blog/2011/03/when-should-we-start-a-registered-disability-savings-plan-for-our-child.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+jackstyan+%28Jack+Styan%29

Just to be clear about the situation when the beneficiary passes away prior to using all of the funds in their RDSP, the holdback amount returns to the federal government. The holdback amount is the amount that the RDSP received from the federal government (Grant and Bond) in the previous ten years. If ten years has passed from the last federal government contribution, the holdback amount is zero and non of the RDSP will return to the government.

I would like to know how much money i need to start a RDSP? i was told i dont need any money to open a RDSP it this true/ or not thank you.

I was born in 1961 and have an RDSP with BMO. Can I use the money in my RDSP for a down payment on a house? I am a first time home buyer and I would rather not have to wait until I am 59 to use this money. I have a disability and need to purchase a house that is accessible to me.

Thank you for your question, Emilie. Someone from PLAN will contact you directly about this and let us know if you have any additional questions. In general, there are no restrictions on WHAT the plan’s funds can be used for, including down-payments—however depending on WHEN money is withdrawn from the RDSP, it can affect government grants and bonds, and your income taxes.

Can a withdrawal be taken from a RDSP?

Here is the RDSP scenario:

If a person were to contribute an initial $6,000 to an RDSP in 2011 for her 10 year old daughter, and receive a grant of $14,000 (3,500 this year and $10,500 next year as the carry forward amount) assuming she makes no further contributions, can she close the plan and receive the full proceeds after a 10 year period, say 2022 (subject to the claw back of any bond or grant that was paid into the plan in the 10 years prior to the withdrawal)?

My son didn’t apply for his grant and other funding for 2010, although he got them the year before. He also didn’t file his 2010 taxes. Is it too late to file for the grants once he’s filed his tax return?

I have a question regarding “qualified investments” vs “non-qualified investments.” Are Call and Put options qualified investments? If the option’s underlying asset is the S&P 500 Index is the Call and Put options considered a qualified investment?

The CRA web site is quite vague when it comes to listing or describing exactly what are “qualified” and “non-qualified” investments.

Hi Beth,

No, it’s not too late—people can now claim unused grants and bonds from the previous 10 years (starting from 2008, when RDSPs first became available) and this applies if you are opening a new savings plan, or, like your son, already have an RDSP.

Your son’s grant and bond eligibility for 2010 or any year is determined by his family income, but note the definition of family income depends on age. Up to the year he reaches 18—family income refers to the income of his parents. Beginning the year your son becomes 19—family income is his own income plus his spouse’s if he has a spouse.

So, depending on your son’s age, the tax returns of either his parents or him and his spouse need to be filed to receive a potential grant or bond. And typically, family income from 2 years prior is used to assess grant and bond eligibility and amounts.

If you have a daughter with an intellectual disability, who gets the Disability Tax Credit, has filed income taxes for the last two years, makes under $24,000 a year and is 49 years old today, can she still qualify to open an RDSP at age 49? I wasn’t sure if it was 49 and under could apply, or once you turn 49 you are ineligible? I realize that if she is eligible to open an RDSP, she would only be contributing to it for 10 years and then would wait 10 years to take the money out. The government contributions stop at age 59?
I know that it is more than one question, but I hope you can help, so that I can advise my friend as to whether her daughter is eligible to open an RDSP.
Thank you very much.

Elizabeth Arnold

What is the maximum possible amount that could be received over a lifetime from from CDSG and CDSG assuming all eligibility requirements are met.

I think I saw on your home page it was $90,000 – how is this calculated? $20,000 from CDSB and $70,000 from grants?

Hi Gary,

You got it exactly right: Assuming all eligibility requirements are met, a person in his or her lifetime can receive a maximum of $20,000 from the Bond and $70,000 from the Grant, totalling $90,000.

Hi Gary from the Okanagan,

Sorry for the slow reply. We put your question of whether Call and Put options are qualified investments or not to our professional advisors who did some digging. You are indeed correct that the legislation isn’t so clear, however an authoritative answer has been given to us and it is “no”. The same rules as RRSPs apply and Call and Put options are not considered to be eligible investments for RDSPs.

Please also see the following CRA list of non-qualifying investments:

Ineligible RRSP Investments Employee options to purchase stock; Gold, silver and other precious metals; Commodity futures or contracts; Listed personal property such as works of art & antiques; Gems and other precious stones; Land; Bonds where the issuer is a wholly-owned subsidiary and the shares of its parent are not listed on a Canadian stock exchange; Mortgages on commercial properties owned by you or a family member; Small business investments; Puts and uncovered call options; Bonds or debentures of a company whose shares are listed only on a prescribed foreign stock exchange, even though the company’s shares may be qualified.

Will tax be withheld from each payment similar to pension monthly payments?

I also want to know if the beneficiary can skip a year or two or three of high income / low goverment grants (or high family income) to avoid taking the grant in a year when it would be really low or zero. ie starting RDSP at age 15 contributing for one year. Then stopping for 16 and 17 due to high family income and resuming again at 18 so using beneficiary’s income level instead of family. Or do those years keep on ticking along as part of the maximum 20 years to contribute with resulting government grant & Bond

Thanks

Tess

Hi Kathleen,

Taxes are not withheld from payments like in a pension. Ongoing contributions to an RDSP are already after-tax money—well, except for grants, bonds and interest

So when money is taken out, any amount that was ever put in by the beneficiary (as well as their family and friends) is not taxed again. But the government contributions and the investment income earned in the plan need to be included in the beneficiary’s income for tax purposes.

Hi Tess,

Interesting question. There are no rules within the RDSP legislation that prevent you from skipping years. A Senior Manager of Registered Plans at Royal Bank confirmed that given the existing RDSP rules, the functionality will be in place within the banks for you to do something like this.

To make it happen, you would likely need to visit or call your financial advisor and request that they pause the government grants and bonds (which may require filling out a form). Then when you want them reinstated, you would again make the request at your bank.

Thanks. If and when you try this at your bank, we’d be interested in hearing about your experience!

PLAN

My eight year old grand daughter has type I diabities, can I open a RDSP for her?

John Finn