Guide to the Registered Disability Savings Plan in British Columbia
This guide outlines how to start and manage a Registered Disability Savings Plan (RDSP) in B.C. It was developed by the Registered Disability Savings Plan Action Group and is supported by the Vancouver Foundation and the Government of British Columbia.
After you've read how to get started, follow these steps to getting an RDSP
- Prove your Identity
- Get Disability Tax Credit Approval
- Appeal your Disability Tax Credit
- File Your Income Tax Returns Annually
- Choose Your Financial Institution
- Choose Your Holder
- Open Your Registered Disability Savings Plan
- Invest Your Money
- Re-Apply for the Disability Tax Credit
- Withdraw Your Money
What is an RDSP?
A Registered Disability Savings Plan (RDSP) is a long-term savings plan for people with disabilities. If you have a disability, you may be eligible to open an RDSP. You might have someone help you apply for the RDSP, or someone that applies for it on your behalf. This guide is intended to help you, or someone who supports you, through each step of the process.
What is the benefit of an RDSP?
Even if you don’t have any of your own money to contribute, an RDSP is a good idea to help you save for your future disability-related costs.
If you are eligible, the main reason you should open an RDSP is to take advantage of money the federal government will provide on your behalf.
If you are under age 50, you may be able to get up to $90,000 in grants and bonds over your lifetime.
- Bonds (you do not have to deposit money into your RDSP to get these): Low-income individuals may get up to $1,000 per year.
- Grants (you must deposit money into your RDSP to get these): Low and modest-income individuals may get up to $3 for every $1 you deposit. Matching rates are based on your income and how much you deposit.
Who is eligible for an RDSP?
You are eligible to open an RDSP if you are:
- Able to get the Disability Tax Credit (see step 2); and,
- Under the age of 60.
Is it really worth it?
The rules for RDSPs are complicated, and getting an RDSP may seem like an overwhelming process. However, if you have low or modest income, the benefits of getting an RDSP are well worth the effort.
If a family with an annual net income of $26,000 contributes $900 per year, they will earn $2,300 in federal RDSP grants and another $1,000 in bonds every year. Over your lifetime, you could receive $250,966 from your RDSP, from:
- $18,000 in contributions
- $20,000 in federal bonds
- $46,000 in federal grants, and
- $166,966 in earned interest (at 3% per year)
Will the RDSP impact my government income benefits?
In B.C., the RDSP is exempt as an asset and as income, which means that the RDSP will not impact your income assistance or disability assistance (also known as PWD).
In addition, the RDSP does not affect Federal benefits such as Canada Pension Plan—Disability, Old Age Security payments and the Guaranteed Income Supplement.
- Plan's Step-by-Step Guide to RDSPs (PDF, 1.3MB)
- Government of Canada's Registered Disability Savings Plan Guide (PDF)
- Richmond Centre for Disability's RDSP Quick Guide Checklist (PDF)
- Safe and Secure: 2015 Expanded RDSP Edition
- RDSP Calculator
Who to Contact
- Toll-free RDSP hotline: 1 844 311-PLAN (7526)
To open an RDSP, you will need a Social Insurance Number (SIN) and photo identification. If you currently don’t have any identification, you might need to get proof of your identity before you can apply for a SIN and/or photo ID.
Proof of identity
You will need proof of identity (your Birth Certificate or Certificate of Canadian Citizenship) to obtain a Social Insurance Number (SIN) and photo identification.
Social Insurance Number
A Social Insurance Number (SIN) is a number that you need if you want to work or get other benefits. You will need a SIN to file your tax returns and to apply for the Disability Tax Credit, which is also needed to open an RDSP.
Your bank or credit union will require photo identification when you are ready to open your RDSP. If you don’t already have a photo ID (like a driver’s licence), the BC Services Card has a photo option—and there’s no fee.
To open an RDSP, you must be approved for the Disability Tax Credit. This is the most important step in opening an RDSP—if your application for the Disability Tax Credit is not approved, you cannot open an RDSP.
Are you eligible for the Disability Tax Credit?
Do you have a mental or physical disability that is expected to last, or has lasted, one year or more? If yes, you may be eligible for the Disability Tax Credit. If no, you are not eligible for the Disability Tax Credit.
If you answered yes to the question above, can you answer yes to any one of the following questions?
- Are you blind?
- Do you need extensive therapy or treatment?
- Are you limited in activities that people need to do regularly? For example: speaking, hearing, walking, using the bathroom, eating, getting dressed, remembering, banking, finding your way around, dealing with emergencies.
If you can answer yes to at least one of these questions, you should apply for the Disability Tax Credit. If you answer no to all three questions, you are not eligible for the Disability Tax Credit or the RDSP.
How to apply for the Disability Tax Credit
- Complete Part A of Canada Revenue Agency's form T2201 Disability Tax Credit Certificate
- Take the form to your doctor or other medical specialist (see the form for instructions).
- Get the signed form back from your doctor or other medical specialist.
- Send the signed form to a Canada Revenue Agency Tax Centre. Locations are mentioned on the application form.
What you should know
For additional advice, consult the resources listed below.
- Canada Revenue Agency's How to apply for the disability tax credit – step by step instructions
- Ontario Federation for Cerebral Palsy's Guide to Understanding and Claiming the Disability Tax Credit 2011 (PDF)
- Ontario Community Advocacy and Legal Centre's Disability Tax Credit: A Do-It-Yourself Guide
- Plan's Five Myths about the Disability Tax Credit (2012)
If you are not approved for the Disability Tax Credit, you will get a letter explaining why you were turned down. At this point, you should probably get some professional advice, like a professional tax accountant who specializes in disability tax credits, or an advocate. A professional can help you decide how to proceed.
If you are turned down for the Disability Tax Credit, there are two things you can do:
- If there is any information about your disability that you did not include with your application, you can send additional information to your tax services office; and
- You can ask for the decision to be reviewed by the Canada Revenue Agency.
- Vancity has partnered with Ability Tax and Trust Advisors to offer the Equal Futures RDSP. It provides an easy, efficient, and free service to eligible individuals to learn about, qualify for, and open a Vancity RDSP.
- PLAN offers a tutorial on how to apply for the Disability Tax Credit
- You have the right to ask for a tax-related decision to be reviewed (PDF 1.7MB) under the Income Tax Act
Disability Tax Credit (DTC) Tips
- Even if you receive B.C. Disability Assistance (also known as PWD), you need the Disability Tax Credit (DTC) to qualify for the RDSP.
- When you see your doctor or other practitioner, tell him or her as much as you can about how your disability affects your day-to-day life. Keeping a journal of how your condition is affecting the basic activities of daily living can help.
- Tell your doctor or other practitioner how important the DTC is for your future. If they know more about it, they may take extra care in filling out your form.
- If you can, attend the appointment with your friend or relative.
- You want to be the person to send the DTC form in. If you don’t agree with what the doctor or practitioner has written, or feel they have missed information, you can then choose to take it to another practitioner, or get help from a professional.
- Make a photocopy of the completed form.
- If you are an advocacy organization, give your client a template letter addressed to the doctor or other practitioner explaining why your client is applying for a DTC.
The amount of grants and bonds you may get from the federal government depends on your income. To get the maximum grants and bonds, you must file your tax return annually. If you have a low income, there are community supports available to help you file your tax returns.
It is important to note: If you are approved for the Disability Tax Credit, it can usually be made retroactive. You may qualify for RDSP grants and bonds for previous years. You, your spouse or your parents may be eligible for tax refunds.
- Canada Revenue Agency's Community Volunteer Income Tax Program
- Disability Alliance BC's Tax Assistance and Information for People with Disabilities (Tax AID DABC)
Some financial institutions offer the RDSP, others do not. Check the list of participating banks or credit unions on the Employment and Social Development Canada (ESDC) website (link below) and see if the one you use is listed.
Note that some banks or credit unions have different rules about taking money out of your RDSP. All bank or credit unions allow regular withdrawals that begin when you’re older, but only some allow one time withdrawals, such as to buy a car or a house.
Planned Lifetime Advocacy Network (PLAN) has listed additional things to think about when you choose a bank or credit union. See the link to their guide below. Also, on their websites some banks or credit unions offer advice and information on RDSPs; see the links provided below.
The following financial organizations offer the RDSP, the Grant and the Bond. If you do not see your financial institution on this list, contact them. They may still be able to open an RDSP for you.
- Plan Guide Step-by-Step Guide to RDSPs (PDF, 1.3MB) (see page 11 for tips on choosing a bank or credit union)
In B.C., the following banks and credit unions support the RDSP
- Bank of Montreal
- Bank of Nova Scotia
- Community Trust Company
- Global Growth Assets Inc.
- Investors Group Trust Co. Ltd.
- Mackenzie Financial Corporation
- RBC Royal Bank
- TD Waterhouse Canada Inc.
- Vancity Credit Union
The holder of your RDSP is the person who makes decisions about investments and withdrawals. In most cases, you will be the holder of your RDSP.
However, if you cannot understand what the RDSP contract means, your bank or credit union may require another person to be the holder of your RDSP. (You will still be the person who gets the money, but someone else will manage the account for you.)
You may be able to choose a person to be the holder of the RDSP (“qualifying family member”) under a temporary federal measure (that ends before 2019) or you may use a Representation Agreement, or other personal planning tool.
- Canada Revenue Agency's Qualifying Family Member (Expires Dec 2018)
- Nidu's Helping a Family Member or Friend with a Disability (Representation Agreements)
- BC Public Guardian and Trustees' It’s Your Choice: Personal Planning Tools (PDF)
Now that you have qualified for the Disability Tax Credit, you are ready to open your RDSP. Schedule an appointment with your bank or credit union. When you go to your appointment, be sure to bring your Social Insurance Number and your photo ID.
- See participating bank or credit unions in Step 5
- Disability Alliance BC's RDSP and People Receiving Social Assistance
Now that you’ve opened your RDSP, you’re ready to start contributing and taking advantage of grants and bonds. You may wish to:
- Learn about grants and bonds from the federal government. These are based on your “family income.” If you are a single adult, this means your income. If you are married or in a common-law relationship, “family income” means the combined income of you and your spouse or common-law partner.
- Bonds: A full bond ($1,000 per year) is available if your family income is $26,021 or less. A partial bond is available if your family income is between $26,021 and $44,701.
- Grants: If your family income is $89,401 or less, you may get matching grants of 300% and 200% (depending on the amount you deposit into your RDSP). If your family income is more than $89,401, then a matching grant of 100% (on first $1,000 per year) is available.
- Think about where you might get money from to invest in your RDSP (such as from your disability payment, gifts from friends, family, etc.). Figure out how much you can contribute each month. You may be able to get $150 from the Endowment 150 Fund (see below).
- Learn about ways you can save your money in the RDSP. An advisor at your bank or credit union can help you choose the type of investment that is right for you.
- Employment and Skills Development Canada's RDSP Calculator
- Endowment 150
- Employment and Skills Development Canada's Registered Disability Savings Plan
- Canada Revenue Agency's Eligible Investments (also refer to your preferred bank or credit union’s website, as listed in Step 5)
Even after you have applied for the Disability Tax Credit and your request forms are approved, you will have to do it again after some time. Your approval letter will tell you when you need to re-apply. This may be only one year later, or it might be longer, such as in 10 to 15 years. To re-apply, you just follow the same actions outlined in Step 2 (and Step 3 if you need to).
There are rules about when and how much you can withdraw from your RDSP.
For example, if the government has contributed more money to your RDSP than you have, your RDSP is considered a “primarily government-assisted plan” and you are limited in how much money can be withdrawn in a year. If you have contributed more money than the government however, there are no annual maximum restrictions.
But remember, there is also a 10 year rule. Unless you have a shortened life expectancy, you always need to wait until at least 10 years after the last grants and bonds were put into your RDSP to make any withdrawals, or you will have to pay some of those grants and bonds back.
Before you begin withdrawing from your RDSP, check with your RDSP provider about:
- Types of withdrawals;
- Maximum withdrawal limits; and
- The 10-year repayment rule for grants and bonds.
Note that when you withdraw from your RDSP, a portion of your withdrawal is taxable. You may want to consult a professional who can provide tax advice.
Finally, you may want to research how RDSP withdrawals affect your ability to get other government-provided benefits. In B.C., RDSP withdrawals do not affect your ability to get provincial disability assistance benefits (called PWD benefits).
Note that RDSP withdrawals are also excluded for the purpose of calculating Old Age Security (OAS) and the Guaranteed Income Supplement (GIS).
- Employment and Skills Development Canada's RDSP Calculator
- Employment and Skills Development Canada's Registered Disability Savings Plan
- Disability Alliance BC's The RDSP and People Receiving Social Assistance
Learn more about accessibility in B.C.