BMO Financial Group

BMO Financial Group

October 24, 2012 13:00 ET

The Registered Disability Savings Plan: What Canadians with Disabilities and Their Families Need to Know

- RDSPs can help provide financial security for individuals with disabilities

- The program combines the advantages of tax deferred investment growth with the opportunity to receive government subsidies

- However, despite the many advantages of RDSPs, only 13 per cent of Canadians with disabilities have an RDSP account

TORONTO, ONTARIO--(Marketwire - Oct. 24, 2012) - BMO Financial Group today reminded Canadians with disabilities and their families of the important role the Registered Disability Savings Plan (RDSP) can play in helping provide financial security for those with a disability.

RDSPs combine the advantages of tax deferred investment growth with the opportunity to receive government subsidies. However, despite the benefits that RDSPs can provide, according to Human Resources and Skills Development Canada only 13 per cent of Canadians with a disability have taken advantage of the program.

BMO was the first bank to offer RDSPs and is the current market leader in the space.

"The expenses associated with having or caring for someone with a disability can be daunting," said Robert Armstrong, Vice President, Managed Solutions and Registered Plans Strategy, BMO Investments Inc. "An RDSP can play an important role in helping reduce the financial strain, especially when you consider the significant savings a beneficiary can accumulate through the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB), as well as the impact of tax-deferred investment growth."

"When determining what investments to include in an RDSP, it's important for plan holders to understand their investing horizon and to balance risk appropriately," continued Mr. Armstrong. "It's equally important to opt for investment products that have highly competitive management fees such as BMO ETF Portfolios, which combine the advantages of mutual funds and exchange traded funds."

Mr. Armstrong concluded by noting that, as the first bank to introduce RDSPs, BMO feels it has a special responsibility to help educate Canadians about the advantages of the program.

About the RDSP

The RDSP encourages families and individuals to save for the long-term financial 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 who 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
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 must open an RDSP in the year before they turn 60, (or by Dec 31 in the year in which they turn 59), have a valid SIN, and are eligible for the Disability Tax Credit.
Who can set up an account? An account can be set up by the beneficiary, parents of a minor (ages vary depending on province of residence) beneficiary or any individual or organization legally authorized to act on behalf of the beneficiary.
Who can contribute? 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.

For more information on the RDSP, please visit:

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