RDSP Contributions and Withdrawals
There is no limit to how much can be contributed in a year, but there is a lifetime limit of $200,000 for private contributions, which include regular contributions, rollover contributions from a Registered Retirement Savings Plan (RRSP) and/or Registered Education Savings Plan (RESP); private contributions do not include the Canada Disability Savings Grant and/or Bond and earnings gained from the RDSP. In addition:
Contributions are eligible for the Canada Disability Savings Grant (CDSG) until age 49;
Contributions are not tax deductible, although investment growth is tax-deferred;
Anyone can contribute as a gift for the beneficiary with written consent from the plan holder;
There are two types of government benefits available to help support an RDSP beneficiary—the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) for low- to moderate-income families and individuals.
The CDSG is an incentive the Government contributes to an RDSP. Personal contributions attract government matching, and family income determines the rate at which contributions are matched. The CDSG provides matching contributions of up to $3,500 annually until December 31 of the year the beneficiary turns 49 (up to a $70,000 lifetime limit.)
Regardless of whether RDSP contributions are made, lower and moderate income families and individuals may qualify for the CDSB. The bond can be paid into an RDSP up until December 31 of the year the beneficiary turns 49 (up to a $20,000 lifetime limit.) Tax-returns must be filed to be eligible for the CDSB. No contributions are required to be eligible for the CDSB, which was created to assist families who may not have the resources to make a contribution.
RDSP withdrawals, which are called Disability Assistance Payments (DAPs), can be made to the beneficiary at any time and for any purpose. However, the beneficiary must start receiving regular payments, called Lifetime Disability Assistance Payments (LDAPs) by the end of the year they turn 60. Once LDAPs start, they will continue for the life of the beneficiary.
If the plan holds money from the CDSG or CDSB, there are other rules that can impact withdrawals:
If the beneficiary receives the Grant and/or the Bond up until the end of the year they turn 49, they must wait at least 10 years or until they are 59 to take out any money from their RDSP. If they receive the maximum amount of Grant and/or Bond at an earlier age they still need to wait at least 10 years before they take any money out of their RDSP. If any amount of money is withdrawn from an RDSP while the beneficiary receives the Grant and/or Bond, then for each $1 withdrawn, $3 of any CDSG or CDSB paid into the plan in the 10 years prior to the withdrawal must be repaid, up to a specified maximum.
If the majority of the funds in the RDSP are from the CDSG or CDSB, then there are limits on what can be withdrawn in a year.