RDSP

The RDSP was introduced in the 2008 Canadian Federal Budget and claims to offer the worlds first Registered Disability Savings.  It has been designed to be similar to the Canadian Registered Educational Savings Plan (RESP) but for those individuals living with a disability and instead of money being put away for post-secondary education, it can be used for any purpose that benefits the plan’s beneficiary (note: there are conditions on when you can withdraw ).  I believe though they are promoting that it be used more like a retirement fund and gives families an ability to save for a loved ones future.

Like the RESP, the Canadian government provides a matching grant based on family income.  It is my understanding that Canadians with net family income under $75,769 a year get $1,500 in federal grants on the first $500 contribution to an RDSP each year, $2,000 in grants for the next $1,000 annual contribution, and if income is over $75,769, $1,000 in grants for a $1,000 contribution to a maximum of $70,000 for all contributions made by age 49.

In our case, our combined family income is greater than $75k, so for every annual contribution of $1000, the government will match it with a $1000 grant. Given that this is the threshold for matching, we have currently chosen to limit our contribution to $1000 annually. So far we have contributed the last three years and have received three of matching grants for a total of $6k. And to be safe we have put the funds in GIC’s. The interest rate is low but at least it is guaranteed.

For more information on eligibility, contributions, setting up an account, withdrawal conditions, etc. check out the CRA’s web-site:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rdsp-reei/menu-eng.html

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