Registered disability savings plans (RDSPs)

Frequently asked questions

1. Who can be a beneficiary under an RDSP?
2. Can there be more than one beneficiary under an RDSP?
3. Can a beneficiary have more than one RDSP?
4. Who can open an RDSP?
5. Can there be more than one holder under an RDSP?
6. Can the holder of an RDSP be changed?
7. Does the holder need to be a resident of Canada?
8. Who can contribute to an RDSP?
9. How long can contributions be made to an RDSP?
10. How does an issuer set up a disability savings plan specimen?
11. Who can be an issuer of an RDSP?
12. How does an issuer amend an approved specimen plan?
13. When is an RDSP considered registered?
14. When is an RDSP no longer considered registered?
15. What are the Canada Disability Savings Grant and the Canada Disability Savings Bond?
16. If an RDSP is opened in 2009, is the beneficiary able to apply for the 2008 Grant and Bond?

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Q.1 – Who can be a beneficiary under an RDSP?

A.1 – A person who is a resident of Canada and who is a disability tax credit (DTC)-eligible individual.

A person is DTC-eligible in a tax year if they have a severe and prolonged physical or mental impairment, and they or another person is entitled to a credit under section 118.3 of the Income Tax Act.

To be entitled to the credit, Form T2201, Disability Tax Credit Certificate, must have been completed by a qualified practitioner and submitted to the Canada Revenue Agency for approval. For more information on the disability tax credit, see Persons with disabilities.

Q.2 – Can there be more than one beneficiary under an RDSP?

A.2 – No. There can only be one beneficiary under the plan. The beneficiary stays the same throughout the lifetime of the plan.

Q.3 – Can a beneficiary have more than one RDSP?

A.3 – No. Only one plan can be established for a beneficiary.

The only exception to this rule is when funds are being transferred from one RDSP to another with a different issuer. The first plan must be ended within 120 days of the new plan being established.

Q.4 – Who can open an RDSP?

A.4 – A beneficiary can open an RDSP and become the holder of the plan.

If the beneficiary is a minor, another person can open an RDSP for the minor and become the holder if that person is:

• a legal parent of the beneficiary;
• a guardian, tutor, or curator of the beneficiary, or an individual who is legally authorized to act for the beneficiary; or
• a public department, agency, or institution that is legally authorized to act for the beneficiary.

A beneficiary may have reached the age of majority but not be competent to enter into a contract. If so, another person can open an RDSP for the beneficiary and become the holder if they are:

• a guardian, tutor, or curator of the beneficiary, or an individual who is legally authorized to act for the beneficiary; or
• a public department, agency, or institution that is legally authorized to act for the beneficiary.

A legal parent who would not otherwise be able to open an RDSP for an adult beneficiary (either because the beneficiary is competent or because the beneficiary is not competent and the parent is not the legal representative) may do so if the parent is, at that time, the holder of a pre-existing RDSP for the beneficiary. This ensures that the parent can transfer to a new RDSP issuer. The pre-existing RDSP must be closed immediately after the transfer of funds.

Q.5 – Can there be more than one holder under an RDSP?

A.5 – Yes. The legal parents of the beneficiary can both be holders under the plan. In addition, the parents and the beneficiary can also be joint holders under the plan.

Q.6 – Can the holder of an RDSP be changed?

A.6 – Yes. Over the lifetime of a plan, the holder can change. For example, if the mother establishes the plan and is the holder, after her death the beneficiary or the beneficiary's subsequent legal guardian can become the plan holder. If at any time the plan holder (other than a legal parent) ceases to be an eligible holder, they must be replaced with someone who is eligible to be a holder of the plan.

Q.7 – Does the holder need to be a resident of Canada?

A.7 – No. The holder does not have to be a resident of Canada. However, the beneficiary must be a resident of Canada when the plan is opened and when each contribution is made to the plan.

Q.8 – Who can contribute to an RDSP?

A.8 – With the holder's written consent, anyone can make a contribution for a beneficiary under an RDSP.

Q.9 – How long can contributions be made to an RDSP?

A.9 – Contributions can be made to a plan until the earliest of:

• the beneficiary's death;
• the year in which the beneficiary reaches 59 years of age;
• the time when contributions to the plan (and any prior RDSP of the beneficiary) total $200,000;
• the time when the beneficiary no longer qualifies for the DTC; and
• the beneficiary is no longer resident in Canada for tax purposes.

Q.10 – How does an issuer set up a disability savings plan specimen?

A.10 – The issuer must submit a copy of the terms of the specimen plan, including the declaration of trust and the application form, to the Registered Plans Directorate for approval. The terms of the plan must meet the requirements under section 146.4 of the Income Tax Act.

Q.11 – Who can be an issuer of an RDSP?

A.11 – An issuer of an RDSP must be a trust company licensed or authorized to carry on business in Canada.

The issuer of an RDSP must also have entered into an agreement with Human Resources and Skills Development Canada for the administering of the Canada Disability Savings Grant and the Canada Disability Savings Bond programs.

Q.12 – How does an issuer amend an approved specimen plan?

A.12 – The issuer must submit any amendment it wants to make to the specimen plan to the Registered Plans Directorate for review. After an amendment has been approved, the issuer can notify the contract holder of the amendment and can market any future plans based on the amended specimen plan.

Q.13 – When is an RDSP considered registered?

A.13 – An RDSP is considered registered if all the conditions of subsection 146.4(2) of the Income Tax Act have been met. This includes:

• the specimen plan has been submitted to the Registered Plans Directorate and is approved;
• the social insurance number (SIN) of the beneficiary of the plan and the SIN or Business Number of the holder(s) have been provided to the issuer; and
• when the plan was established, the beneficiary was resident in Canada.

The issuer must submit the information no later than 60 days after the plan is established.

Q.14 – When is an RDSP no longer considered registered?

A.14 – An RDSP is no longer considered registered when it fails:

• to comply with any of the conditions under subsection 146.4(2) of the Income Tax Act;
• to comply with any requirements of the Canada Disability Savings Act or its regulations; or
• to be administered (at any time) in accordance with the terms of the plan.

The Minister of Revenue may defer or waive the deregistration of a plan in certain circumstances.

Q.15 – What are the Canada Disability Savings Grant and the Canada Disability Savings Bond?

A.15 –The Canada Disability Savings Grant and the Canada Disability Savings Bond are federal programs that provide payments to RDSPs. More information about these payments can be found on Human Resources and Skills Development Canada's website at www.hrsdc.gc.ca.

Q.16 – If an RDSP is opened in 2009, is the beneficiary able to apply for the 2008 Grant and Bond?

A.16 –On December 23, 2008, the Minister of Finance and the Minister of Human Resources and Skills Development jointly announced that the deadline for opening an RDSP, making contributions and applying for the 2008 RDSP Grant and Bond, has been extended to March 2, 2009 from December 31, 2008. Canadians opening and contributing to an RDSP before March 3, 2009 can apply for the Grant and Bond for 2008 as long as they meet the grant and bond eligibility requirements. Further information on this announcement can be found on the Department of Finance website. Information on grant and bond eligibility requirements can be found on the Human Resources and Skills Development Canada website.