1. Registered Disability Savings Plans (RDSP)
2. Summary of RDSP
3. Highlights
4. Withdrawal from the RDSP
5. RBC offers RDSP at Local Branch
6. How to apply for a BMO RDSP?
7. Vancouver Foundation’s Endowment 150 Fund for RDSP
Registered Disability Savings Plans (RDSP)
It is good news and important information for persons with disabilities to understand the new Government initiative – RDSP, because there is a great deal of money that individuals with disabilities and parents of children with disabilities can access if they are eligible to set up a RDSP account.
Click here for Government News Release on December 23, 2008 – Government Welcomes National Availability of Registered Disability Savings Plans and Extends Deadline for Establishing a Plan and Applying for the 2008 Grant and Bond.
Most provinces have already agreed to exempt this money from qualifying for social assistance from the province. The province of BC has fully exempted the RDSP from impacting disability benefits as an asset or income.
Immediate action – if you sign up before March 2, 2009, you may be eligible for up to $4,500 right away. If you earn less than $21,287, you will receive $1,000 from the bond; plus your own contribution of $1,500, you can access $3,500 grant, making a total of $4,500.
Summary of RDSP
A Registered Disability Savings Plan (RDSP) helps parents and others save for the long-term financial security of a person with a severe disability. In general, any person under the age of 60 who is eligible for the Disability Tax Credit and resident in Canada can establish an RDSP. If the person is a minor, their parent or legal representative may establish the RDSP for their benefit.
The lifetime contribution limit for an RDSP is $200,000, with no annual limit. Anyone can contribute to the RDSP with the written permission of the plan holder. Contributions are not tax-deductible and are not included in income when paid out of an RDSP. Investment income earned in the plan accumulates tax-free. However, grants, bonds, and investment income earned in the plan are included in the beneficiary’s income for tax purposes when paid out of the RDSP.
• 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• When earnings are withdrawn as part of a disability assistance payment, they are taxable in the hands of the beneficiary (likely to be taxed at a lower rate);
• The lifetime contribution limit is $200,000 per beneficiary. There is no annual contribution limit;
• Only one beneficiary can be named to an RDSP. A beneficiary can only have one RDSP.
• For more information please click here
Highlights
Canada Disability Saving Grant – a Federal Government contribution to assist families and individuals to save for future.
• Greater grant for low and middle income categories
• When annual income is $75,769 or less, the grant is $3 for every $1 contributed on the first $500 to a maximum of $1,500; $2 for every $1 contributed on the next $1,000 to a maximum of $2,000
• When annual income is over $75,769, the grant is $1 for every $1 contributed on the first $1.000 to a maximum of $1,000
• The lifetime maximum is $70,000
• The grants can be received for 20 years or until the beneficiary turns 50
• Beneficiaries must wait for 10 years after last grant or bond is received to avoid penalties (see withdrawal below)
Canada Disability Saving Bond – paid by the Federal Government directly into a registered disability savings plan.
• When annual income is $21,287 or less, the bond is $1,000 per year without having to make a contribution
• When annual income is between $21,287 and $37,558, the bond is part of $1,000 based on a formula
• The lifetime maximum is $20,000
• The bonds can be received for 20 years or until the beneficiary turns 50
Withdrawal from the RDSP
• There is no restriction on when the money can be withdrawn or for what purpose
• Any Grant or Bond received within 10 years must be repaid on withdrawal
• Each dollar withdrawn is considered to be comprised of contribution, grant, bond and income. The portion of grant, bond and income is taxable.
RBC offers RDSP at Local Branch
Starting February 16, 2009, RBC started to offer Registered Disability Savings Plans (RDSPs), allowing eligible Canadians to take advantage of 2008 Canada Disability Savings Grants (CDSGs) and Canada Disability Savings Bonds (CDSBs). You can set up RDSP at local RBC branch. In Richmond, you can contact Ms. Louise Yeoh at 604-665-5728 who can provide direct assistance in English, Cantonese & Mandarin.
Click here to view the Press Release.
How to apply for BMO RDSP?
Click here to view Update on Financial Institutions Offering RDSPs, the Grant, and the Bond
BMO Bank of Montreal is offering the RDSP, Grant and Bond to clients across Canada. For more information, visit the Bank of Montreal Web site at www.bmo.com or call them at 1-800-665-7700.
BMO RDSP will be serviced and sold exclusively through BMO’s investment call center, BMO Investment Centre (BMO IC) at 1-800-665-7700. Bell Relay Service: 1-800-855-0511
BMO IC is open Monday to Friday 7 AM to 11 PM (EST) and Saturdays 9 AM – 5 PM (EST) BMO IC provides service in both two official languages plus Cantonese and Mandarin
Holiday Hours: Dec. 24 open until 6pm (EST), Dec. 31 open until 9pm (EST)
Vancouver Foundation’s Endowment 150 Fund for RDSP
Vancouver Foundation received a $5 million grant from the Province of BC to assist people with disabilities. The grant was, in turn, used to create Endowment 150 which will provide people with disabilities $150 towards their RDSP and will potentially benefit 30,000 British Columbians. In just the first year, a British Columbian on income assistance can turn $25 into $1700 with Endowment 150 and grants and bonds from the Federal Government.
How To Apply - In September 2009, the BC Ministry of Housing and Social Development will mail a letter to all persons with disabilities who are eligible for Endowment 150. Recipients can take this letter to their financial institution where they have their RDSP account and apply for $150 to be transferred to their account.
Click here to view more info.