RDSP
Long-term savings for a person eligible for the Disability Tax Credit, with substantial government matching.
The basics
An RDSP helps a person eligible for the Disability Tax Credit (DTC) save for long-term financial security, with government grants and bonds that can far exceed what the family itself contributes.
The beneficiary must be DTC-eligible, a Canadian resident, and under 60 to open a plan. Contributions can be made by the beneficiary, a family member, or anyone with written permission from the plan holder.
It’s designed to stay open for decades — grants and bonds are only fully retained if the plan isn’t collapsed or the beneficiary doesn’t withdraw for at least 10 years after each grant/bond deposit (the "10-year rule," discussed below).
How much you can put in
Lifetime contribution limit is $200,000 per beneficiary, with no annual maximum.
The Canada Disability Savings Grant (CDSG) matches contributions at 300%, 200%, or 100%, depending on family income, up to $3,500 in grant per year and $70,000 over the beneficiary’s lifetime.
The Canada Disability Savings Bond (CDSB) adds up to $1,000/year with no contribution required, for lower-income families (family net income under roughly $38,237 for 2026), to a lifetime maximum of $20,000.
Families with net income over roughly $117,045 (2026) receive a reduced CDSG rate — 100% matching on the first $1,000 contributed, rather than the higher-tier rates.
RDSP tax treatment
| Treatment | |
|---|---|
| Contributions | Not tax-deductible |
| Grants (CDSG) and bonds (CDSB) | Not counted as income when deposited |
| Growth inside the account | Tax-deferred |
| Withdrawn contributions | Tax-free — return of after-tax money |
| Withdrawn grants, bonds, and growth | Taxed in the beneficiary’s hands, usually at little or no tax given typical income levels |
What the government adds, by income tier
RDSP: government matching by family income tier
The Canada Disability Savings Grant matches at 300% or 200% depending on family income, and the Canada Disability Savings Bond adds money with no contribution required at all for lower-income families.
Per-year illustration, not the full lifetime picture. Total CDSG is capped at $70,000 and CDSB at $20,000 over the beneficiary's lifetime; income thresholds are indexed annually.
Getting money out
Withdrawals (called "Disability Assistance Payments," DAPs) can be lump-sum or, once the beneficiary turns 60, must include a minimum annual "Lifetime Disability Assistance Payment" (LDAP).
The 10-year rule (Assistance Holdback Amount): if a DAP is made within 10 years of any CDSG/CDSB deposit, the plan must repay $3 of grant/bond for every $1 withdrawn, up to the total grants and bonds received in that 10-year window — a significant penalty for early withdrawal.
The plan must generally be collapsed by December 31 of the year the beneficiary turns 59, if LDAPs haven’t already begun.
What happens if you go over
Contributing beyond the $200,000 lifetime limit triggers a 1% per month tax on the excess amount until it’s withdrawn or otherwise resolved.
Is this a fit?
- Any Disability Tax Credit-eligible person (or their family) planning for long-term financial security
- Lower- and middle-income families, who receive the highest CDSG matching rates and are eligible for the CDSB
- Families able to commit to a long time horizon — the 10-year holdback rule makes the RDSP poorly suited to short-term savings needs
How it fits with the rest of your plan
- RDSP withdrawals are generally not counted as income for federal income-tested benefits, and in most provinces (including Ontario, under ODSP rules) RDSP assets and withdrawals are treated favourably and don’t reduce provincial disability support payments — a major advantage over other savings vehicles for ODSP recipients.
- An RDSP does not affect TFSA or RRSP contribution room — they’re entirely independent.
- On the death of an RRSP/RRIF holder, proceeds can in some cases roll over tax-free to a financially dependent child or grandchild’s RDSP, subject to that beneficiary’s own $200,000 lifetime RDSP limit.
What trips people up
- Withdrawing within 10 years of a grant or bond deposit without understanding the repayment (holdback) consequence
- Not applying for the CDSB, incorrectly assuming a bond requires a contribution — it doesn’t
- Delaying opening the plan, since the CDSG and CDSB are only paid up to the end of the year the beneficiary turns 49
- Not coordinating RDSP withdrawals with ODSP or other provincial disability benefit rules, even though RDSP treatment is generally favourable in Ontario
Eligible investments
Cash, GICs, mutual funds, ETFs, individual stocks and bonds, and segregated fund contracts.
A segregated fund RDSP adds maturity/death benefit guarantees, which can suit families prioritizing capital preservation over the plan’s long, locked-in time horizon.
A family with modest income contributing $1,500/year to an RDSP could receive the full 300%/200% tiered CDSG match plus the $1,000/year CDSB, meaning total annual deposits well above $1,500/year from contributions and government support combined, before any investment growth.
Actual outcomes depend on your income, tax situation, and the rules in effect when you contribute or withdraw. Contact Achyut for guidance specific to your situation.