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BMO Financial Group

October 31, 2011 12:49 ET

RDSP-E-C-T: Find out More About the RDSP

TORONTO, ONTARIO--(Marketwire - Oct. 31, 2011) - BMO Financial Group today encouraged Canadians to learn more about the Registered Disability Savings Plan (RDSP).

"The RDSP is a fantastic savings vehicle, introduced by Finance Minister Jim Flaherty, 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. "Yet, our research shows that that only one in ten Canadians with a disability, or those with a family member with a disability, are knowledgeable about the Registered Disability Savings Plan (RDSP) and its benefits, with nearly half having never heard of it."

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

About the RDSP

The RDSP encourages families and individuals to save for the long-term security of persons with severe and prolonged disabilities. It is available to Canadians who are eligible for the Disability Tax Credit, and can provide "peace of mind" to parents and other contributors that may put a plan in place for a beneficiary with a disability.

  • Contributions are not tax deductible but grow on a tax-deferred basis
  • Earnings generated on contributions are tax-exempt while in the plan
  • When earnings are withdrawn as part of a disability assistance payment, they are taxable in the hands of the beneficiary (likely to be taxed at a lower rate)
  • Only one beneficiary can be named per RDSP. A beneficiary can hold only one RDSP
RDSP
What is it? A tax-deferred savings vehicle that provides long-term financial security for persons living with a disability.

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.
Who is eligible? Canadian residents under the age of 60 with a valid SIN who are eligible for the Disability Tax Credit.
Who can set up an account? An account can be set up by the beneficiary, parents of the beneficiary or any individual or organization legally authorized to act on behalf of the beneficiary.

Who can contribute? Contribution limit? Anyone can contribute to an RDSP, provided they have written consent of the account holder.
What is the contribution limit? Up to $200,000 lifetime per individual over the life of the RDSP.

There is no annual contribution limit.
Contribution deadlines? Annual contribution deadline for Grants and Bonds: December 31.

Last day for Grants and Bond eligibility: December 31 of the year the beneficiary turns 49 years of age.

Last day contributions permitted to the plan: December 31 the year the beneficiary turns 59 years of age.

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