BMO Financial Group

BMO Financial Group
BMO Bank of Montreal

BMO Bank of Montreal

November 21, 2011 12:19 ET

Financial Literacy Month-BMO's Tip of the Day: Harness the Power of the Registered Disability Savings Plan (RDSP) to Ensure Long Term Financial Stability

RDSP-E-C-T: Find out More About the RDSP and Financial Literacy

TORONTO, ONTARIO--(Marketwire - Nov. 21, 2011) - To mark Financial Literacy Month, which was launched by Finance Minister Jim Flaherty, BMO is releasing a series of financial tips throughout November. As part of Making Money Make Sense and BMO SmartSteps, BMO's tips are designed to help individuals and families save and manage their day to day finances more effectively.

BMO's Tip of the Day: The Registered Disability Savings Plan (RDSP) is a powerful investment option that can offer long-term financial security for persons living with a disability.

"The RDSP was introduced by Finance Minister Jim Flaherty and is a great savings vehicle which helps families manage the financial costs associated with having, or caring for someone, with a severe disability," said Mark Stewart, Director, Product Development & Management, BMO Investments Inc. "As the first bank to introduce RDSPs, BMO feels a special responsibility to educate Canadians about the advantages they provide. The financial costs associated with having, or caring for someone, with a disability can often be overwhelming and challenging. RDSPs are a solid option that can help ensure the long-term financial stability of Canadians with disabilities."

Introduced in 2008 by the federal government, RDSPs are designed to provide financial security for individuals with disabilities. The RDSP combines the advantages of tax deferred investment growth with the opportunity to receive government subsidies. It includes government incentives such as the Canada Disability Savings Grant (CDSG) and Canada Disability Savings Bond (CDSB) that could add up to an additional $90,000 per individual. The amount depends on the contribution level and family income.

The Power Of The RDSP* Scenario 1 – Investing in an RDSP Scenario 2 – Investing outside an RDSP
Length of time invested 30 years 30 years
Annual rate of return 5.5% 5.5%
Total Investment $45,000 $45,000
Government Grants and Bonds (CDSG and CDSB) $81,000 0
Value When Beneficiary Turns 40 Years Old $344,900 $75,550
* Figures in table are based on estimates and are not guaranteed
Additional Facts on RDSPs:
  • Who is eligible? Canadian residents under the age of 60 and eligible for the Disability Tax Credit. An account can be set up by the beneficiary themselves, parents of the beneficiary or any individual or organization legally authorized to act on behalf of the beneficiary.
  • What are the contribution limits? Up to $200,000 can be contributed over the life of an RDSP. Anyone can contribute to an RDSP, provided they have written consent of the account holder.
  • Are there contribution deadlines? The contribution deadline for 2011 is December 31st. Additionally, the Government of Canada's Budget 2010 announced a new carry forward (catch-up) measure which allows RDSP holders to claim any unused grant and bond entitlements from the past 10 years (starting from 2008).

What media are saying about the RDSP

"Bank of Montreal, a leader in the field from the beginning… now controls about 50 per cent of the market…The message needs to get out. The RDSP is a great program. Spread the word. Please." – Financial Post, October 26, 2011.

"It is a wonderful program… The federal government, banks, non-profit groups and health-care workers should ensure that each and every disabled person who would benefit knows about this superb program." – The Globe and Mail editorial, October 31, 2011

BMO Financial Literacy Month Tips

November 1: Pay more than the minimum payment on a credit card balance.

November 2: Choose a shorter amortization for your mortgage.

November 3: Contribute to a child's Registered Education Savings Plan (RESP) as early as possible.

November 4: Invest in a Tax-Free Savings Account (TFSA) to maximize your savings.

November 7: Switch to weekly mortgage payments to save interest and become debt-free faster.

November 8: Take advantage of credit card travel insurance to lower costs.

November 9: Start early and contribute often to your investment account, rather than waiting to invest.

November 10: Use a line of credit to consolidate high-interest debt and save on interest costs.

November 14: Canadians can give the gift of securities and benefit at tax time.

November 15: Students, pay off your credit card balances and take advantage of student discounts to save money.

November 16: Pay an extra five per cent on your mortgage every year to reduce interest costs.

November 17: Secure your retirement by starting to save early and taking advantage of compounding growth.

November 18: Students can save money by ensuring they are in a no-fee student banking plan.

For more on financial literacy, BMO encourages Canadians to visit and

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