RDSP Q & A: Is it worthwhile opening an RDSP after 50?

February 13, 2020

I am over 50 and am no longer eligible to receive government contributions to my RDSP. Should I still apply for the DTC and open an RDSP?

Many people believe that opening an RDSP after 50 is no longer worthwhile. While you may no longer receive government contributions, there are a number of situations in which opening and contributing to an RDSP, even after the age of 50, can be beneficial.

You may still be able to benefit from the Disability Tax Credit (DTC) for the years you’ve paid taxes while living with a severe and prolonged restriction. The DTC can be claimed retroactively for up to 10 years.

The DTC is also transferable to eligible caregivers. If a family member, friend, or unpaid support person consistently provides you with food, shelter and/or clothing, they may also be eligible to claim all or part of your disability amount on their tax return.

Furthermore, Having an RDSP after the age of 50 can be a great way to save and invest money without having your disability benefits impacted. This is particularly beneficial for people who have or are about to receive a large sum of money, such as through an ICBC settlement, as an inheritance, or from the sale of assets such as real estate. When you choose to withdraw your money, you will still receive your disability benefits without penalty.

 

While it is still beneficial for most, the DTC and the RDSP are not helpful for people who are 50+ if:

 

  • You have not paid taxes (for example, if your income is dependent on disability benefits) during the years you have been severely restricted.
  • You do not have anyone to transfer the credit to.
  • You do not have a sum of money you would like to invest.

 

Possible Barriers:

 

  • Your application will need to be completed by a primary health provider, generally a physician or nurse practitioner. Other health professionals can also complete the form to certify specific restrictions.
  • Physicians can charge a fee for completing the form. However, you may be able to claim these fees as medical expenses when filing your tax return.
  • It may take some time to go through all the relevant information required for the form. It may be difficult, but have a conversation with your doctor about what your day to day restrictions are.

 

For more information and tips on this topic:

A Guide to the DTC & RDSP for People Over the Age of 50

 

For more information on the RDSP: