This is a guest blog post written by Samuel Li, which discusses how a disabled Canadian could enhance their savings through the Registered Disability Savings Plan, RDSP.
Hi readers of BubblesMakeHimSmile.com, I hope you are all well. This is my very first guest post in this blog, and hopefully what I’m going to share will be helpful to you!
Whenever I sit down with clients who have family member with special needs, they often are worried whether there will be enough savings for the disabled dependant in the long run.
For example, “When I’m no longer able to provide support to my disabled children, without adequate savings, will they be able to afford the same treatments or medical services? Hire a qualified professional to assist their daily living activities? Or just maintain the same standard of living?”
From all the many conservations I had with these families, I could truly understand that people with disability and their loved ones could experience a different set of financial challenges throughout their lives.
The Government of Canada also realized these challenges, that’s why in 2008, they launched the Registered Disability Savings Plan (RDSP). This is a very helpful program designed to enhance the long-term savings for the disabled persons. The RDSP makes it a lot easier to accumulate savings by providing assisted government funding and tax-deferred investment growth.
How Does It Really Work?
By having a RDSP account, the beneficiary may be entitled to disability savings benefits such as the Canada Disability Savings Grants (CDSGs) and Canada Disability Savings Grants (CDSBs).
The Canada Disability Savings Grants (CDSGs) is a matching grant where the government will deposit the funding into your RDSP account based on your family income and the amount of your contribution. The maximum lifetime benefit per beneficiary is up to $70,000. Although it varies from each individual case, many families that I’m working with did receive up to 300% of the matching grants on a portion of their contribution.
To provide even more assistance for low income families with special needs, there is the Canada Disability Savings Bonds (CDSBs). Unlike the matching grant, the disability savings bonds do not require any contribution. The government will examine solely on the family net income. If the income is not beyond the program’s limit, up to $1000/year will be deposited into the RDSP account. The maximum lifetime benefit per beneficiary is up to $20,000.
For minor beneficiary, the family net income is that of his or her parents, while beneficiary over the age of majority, the family net income is that of the beneficiary and his or her spouse, if applicable.
Who Could Open a RDSP Account?
A Canadian resident with SIN, contributions to the RDSP can be made until the end of the year in which the beneficiary turns 59, and one must be eligible for the Disability Tax Credit (DTC).
Furthermore, the government grants and bonds will only be paid until December 31 of the year the beneficiary turns 49. The DTC is available to individuals who have mental or physical impairments that markedly restrict their ability to perform one or more of the basic activities of living (i.e., speaking, hearing or walking). The impairment must be expected to last a period of one or more years, and a physician must certify the extent of the disability. Individuals can apply to the Canada Revenue Agency (CRA) for the DTC using form T2201.
About Samuel Li:
Samuel Li is an investment fund advisor and insurance consultant in Ontario, Canada. Since 2005, Samuel has started his financial advisory business with the intent to assist families and small business owners in making the right financial decisions. He is proud to be one of the few advisors who are truly specialized in the RDSP planning for families with special needs. He has great passion in sharing his insights and knowledge on investments, life insurance planning and health & dental coverage. He believes building assets and protecting the financial future is the core in financial planning.
Want to know more about planning for the RDSP? Feel free to connect with me!
Investment Fund Advisor | Investia Financial Services Inc.
Sales Manager & Financial Consultant | Excel Insurance Agency Inc.
80 Acadia Ave., Suite 205, Markham, Ontario. L3R9V1
This article is for general information only and is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice. Please consult an appropriate professional regarding your particular circumstances. This article does not constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. References in this article to third party goods or services should not be regarded as an endorsement of these goods or services. This article is intended for Ontario, Canadian residents only and the information contained herein is subject to change without notice. The owner of this article is not liable for any inaccuracies in the information provided. Image courtesy of http://chanpipat/FreeDigitalPhotos.net