Cessation of Disability or Death of a Beneficiary

What happens if the beneficiary no longer has a severe and prolonged impairment in mental or physical functions?

The RDSP must close and all amounts must be paid out of the plan by December 31 following the first full calendar year that the beneficiary is no longer considered mentally or physically impaired or no longer has the severe and prolonged impairment that qualified them for the disability amount. Any funds remaining in the RDSP after any required repayments of government grants and bonds will be paid to the beneficiary. The taxable portion of the Disability assistance payment (DAP) will be included in the income of the beneficiary in the year the payment is made to the beneficiary.

What happens if the beneficiary dies?

The RDSP must close and all amounts must be paid out of the plan by December 31 following the first full calendar year that the beneficiary dies. Any funds remaining in the RDSP, after any required repayment of government grants and bonds, will be paid to the estate. If a DAP had been made and the beneficiary is deceased, the taxable portion of the DAP must be included in the income of the beneficiary’s estate in the year the payment is made.