Life TRUST Planning

The Canada Disability Savings Act created the Registered Disability Savings program (RDSP). The Act was proclaimed in December 2008 and was enacted in June 2009. The RDSP is designed to provide for long-term financial security of a person with disabilities. Contributions, with the added benefit of government grants and bonds, combined with tax deferred growth, make RDSP’s a powerful investment tool for people with disabilities.

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On December 23rd 2008 the first RDSP was issued. All the major Canadian banks and nine financial institutions offer RDSP’s. The person to whom the benefits of an RDSP grow is referred to as the beneficiary. To qualify as a beneficiary of an RDSP the person must:

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• Have a valid social insurance number

• Have qualified for the disability tax certificate and can claim the Disability Tax Credit (DTC)

• A Canadian resident

• Under age 60

• Only one RDSP per person is allowed

 

The person who establishes an RDSP is referred the account holder. However anyone, with permission from the holder, can contribute to an RDSP. An adult, over age 18, who qualifies can be the account holder and the beneficiary. If the beneficiary is a minor, under age 18, their legal guardian or parent must be the plan holder.

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RDSP Value

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There is no annual contribution limit however the lifetime maximum contribution limit is $200,000. To help you or your child save, the Government of Canada will deposit the following into your RDSP:

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• matching grants of up to $3,500 per year, depending on the amount contributed and your family income. The maximum government grant contribution is $70,000 over your lifetime. Matching grants are available until the end of the calendar year in which you turn 49.

• bonds of up to $1,000 per year for low-income and modest-income beneficiaries. No contributions are necessary to receive the bond. The maximum government bond contribution is $20,000 over your lifetime. If you qualify, bonds will be paid into your RDSP until the end of the calendar year in which you turn 49.

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Money paid out of an RDSP does not affect eligibility for other federal benefits such as the Canada Child Tax Benefit, the Goods and Services Tax credit, Old Age Security or Employment Insurance. Also, all provinces and territories have exempted RDSP income and assets—either in part or in full—for the purpose of assessing eligibility for provincial and territorial programs and services.

 

The RDSP, the grant and the bond are available to Canadians across the country through participating financial institutions.

 

Withdrawals from the Plan

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There are two types of withdrawals a -Lifetime Disability Assistance Payment (LDAP) and a Disability Assistance Payment (DAP)

A LDAP is an annual or monthly payment that once started must be paid until either the plan is terminated or the beneficiary has died. LDAPs must commence by the end of the year in which the beneficiary turns age 60. The annual payments are subject to a maximum withdrawal amount based on the beneficiary’s life expectancy and the fair market value of the plan.

 

DAPs are a lump sum payment made from the RDSP to the beneficiary or the beneficiary’s estate. DAPs may be requested by the beneficiary when they turn 27 provided the total grants and bonds are greater than all the plan holder’s contributions at the beginning of the calendar year. A LDAP and DAP can be used for disability of non disability related expenses .

 

Grants or Bonds received from the federal government within 10 years of receiving either a LDAP or a DAP must be repaid to the government. This is known as the Assistance Holdback Amount.

 

LDAP and DAPs are made up of contributions and earnings and grants and bonds. Income tax applies only to the earnings portion and the grants and bondss and is paid on amounts withdrawn from the RDSP at the beneficiary’s income tax rate.

 

Affect of death or termination of the disability        

 

On the death of the beneficiary the RDSP is collapsed and the proceeds in the plan, less any grants and bond payments not received in the 10 years preceding the beneficiary’s death (which must be repaid to the government) are directed to the beneficiary’s estate and distributed according to the individuals will. If there is no will the assets are distributed according to the provincial estate laws. The original contributions are not taxable however the earnings are taxed as income in the beneficiary’s estate.

In the event that the beneficiary no longer qualifies, the plan is collapsed and the proceeds are paid directly to the beneficiary after the government grants and bonds are re-paid to the government.

 

RDSP Impact on other federal and provincial programs

 

The RDSP does not impact the Old Age Security or guaranteed income supplement, CPP or the GST rebate or the ODSP or their provincial social assistance benefit.

 

AN RDSP THAT EVERYONE CAN OWN

 

The RDSP Centre is pleased to announce a breakthrough in the Registered Disability Savings Plan that will now greatly assist the thousands of Canadians living with disabilities, who are denied the opportunity of owning their own RDSP.

 

They are being left behind by the ‘system. However there is immediate hope for them thanks to a breakthrough in the Federal Government’s Registered Disability Savings Plan (RDSP).

 

The intent of the RDSP was to allow people with a disability to live out their lives in dignity and self-respect in place of eking out a living with food banks, homeless shelters and generally living hand-to-mouth.

 

Yes FINALLY all Canadians with a disability can hold their own RDSP. All they need is a Social Insurance Number, qualify for the Disability Tax Credit and complete the five easy forms listed below: and if their disability was before 2008 and their only income was social assistance benefits for Canadians with a disability they may receive a $10,000 deposit into their RDSP. Just Think of it $10,000 free money from the federal government        

 

The Registered Disability Savings Plan Application kit

1. RDSP Application form

2. Application for RDSP Grants and Canada disability saving Bond- form 5608

3. Direction, Authorization and Consent for registered accounts form

4. RDSP acknowledgment and release form

5. Investment letter of direction form

 

TO RECEIVE YOUR RDSP APPLICATION KIT

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