Do you, or someone you love, have a disability? Does it leave you feeling concerned about your financial well-being?
Applying for a Registered Disability Savings Plan (RDSP) can help ease your worries about long-term financial security.
To be eligible for a RDSP you must:
- Be approved for the federal disability tax credit
- Be a Canadian resident
- Be under the age of 60
Advantages of a Registered Disability Savings Plan (RDSP)
There are many advantages to opening a RDSP. Created by the federal government, the RDSP provides people with disabilities an easy and effective way to save and invest for their long-term financial security.
There are 3 important advantages:
- Tax free growth
- Government incentives
- Income payments do not affect other government programs.
Since the RDSP is a registered savings plan, earnings within the plan grow tax free until the money is withdrawn. This means that your RDSP contributions can grow faster. This growth can be maximized further by adding investments to your plan. There are many different investment options that will help to maximize your plan’s growth potential.
RDSPs may be eligible for government incentives composed of both grants and bonds. Grants can be up to an annual amount of $3,500 and lifetime maximum of $70,000. For the bond portion, annual amounts can be up to $1,000 and lifetime maximum of $20,000. Both grant and bond growth can substantially boost an RDSPs value.
Finally, income payments from RDSPs do not affect income-tested federal government programs such as Old Age Security, Guaranteed Income Supplement and Canada Pension Plan. In most provinces you will still qualify for existing provincial social assistance programs if you have an RDSP.
The best way to take full advantage of the benefits of a RDSP is to contribute and earn the maximum grants and bonds as early as possible and aim to catch up on any past unused grants and bonds for which you are eligible. This way you can expect to accumulate more thanks to compounding returns and tax deferred growth.
Mutual funds are offered through Credential Asset Management Inc.