About Registered Disability Savings Plans (RDSPs)

A registered disability savings plan is a trust arrangement between a holder and an issuer (a trust company in Canada). The purpose of such a plan is to provide for the long-term financial security of a beneficiary who has a prolonged and severe physical or mental impairment. The beneficiary named under an RDSP must be eligible to receive the disability amount.

Contributions can be made to the plan by the beneficiary, by their parents or family members, or by other authorized contributors. Contributions are not tax deductible. However, the earnings generated on contributions are tax-exempt while they stay in the plan. When earnings are withdrawn as part of a disability assistance payment, they are taxable in the hands of the beneficiary.

Contributions that are made to an RDSP may be supplemented by payments from the Canada Disability Savings Grant program. This program is administered by Human Resources and Skills Development Canada (HRSDC).

Lower-income families may qualify for payments from the Canada Disability Savings Bond program (also administered by HRSDC) without having to make a contribution to an RDSP.

Before marketing an RDSP, the issuer must send a specimen plan to the Canada Revenue Agency (CRA)'s Registered Plans Directorate for review to ensure that the terms of the plan meet the requirements of the Income Tax Act.