Author Topic: RDSP = Free Money (no, I'm serious!)  (Read 5075 times)

SerenaDarrin

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RDSP = Free Money (no, I'm serious!)
« on: December 29, 2018, 03:17:45 PM »
I'm quite serious -- the government will give you money to put into an RDSP, and most folks who could be eligible don't know about this. 

Myself, I'm a new member who's nowhere near FI (still very limited income), but I'm still applying Mustachian principles as I can. :) And one of the things I strongly, strongly, suggest folks do is find out if they're eligible for an RDSP.  (Registered Disability Savings Plan). 

Depending on your income, you get a grant once a year even if you don't put anything in it.  And contributions from the Government when you contribute?  Yes please?

The grants and contributions have a 10 year maturity period -- if you pull them out before the 10 years, you have to repay them.  But, you can invest them.  It's an amazing return on investment and I wish I'd found it years ago.

To be eligible, you must be claiming the Disability Tax Credit, which will require some paperwork from your doctor.  But seriously, do it.   You can claim disability-related expenses on your taxes, you get more out of the Working Tax Benefit, and more, plus the RDSP.    And, if you are on or ever need Disability Supports, the assets within an RDSP are exempted from the asset limits. :)

I'm just doing a summary, so you'll want to check it out.  But for all the spoonie/disabled Mustachians out there in Canada, seriously.  A lot of people aren't getting the grant you can have just for opening one of these!

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/registered-disability-savings-plan-rdsp.html

Goldielocks

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Re: RDSP = Free Money (no, I'm serious!)
« Reply #1 on: December 31, 2018, 02:40:19 AM »
As a bonus, the government is surprising helpful for people that put in the application form, and will go retroactively for many years if you did not know about and and are applying later.

If you get the disability tax credit, and have a bit of cash to save, you should be registered for RSDP and get your free money.

Le Poisson

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Re: RDSP = Free Money (no, I'm serious!)
« Reply #2 on: February 07, 2019, 06:11:51 PM »
Glad to see this thread and that Goldie has jumped in.

We opened an RDSP for our son last year - he is an Autism Spectrum kid. To see him you would not know he is on the spectrum, but he struggles mightily in school, socially, and with logic. On advice found on the forum and from friends we chased the RDSP. It was not easy. There was a lot of paper work that had to be tracked down, and we had to provide proof of diagnosis, a clinician's prognosis, and a full treatment history.

We got it done eventually. By we, I mean Momma, because she's a trooper.

For spectrum kids you usually have to apply at least twice before your case is accepted. At least that is the anec-data around here. Once the account is approved, finding a bank that offers the product is a trick. None that we found offered self-directed investing within an RDSP, so we went with Royal - then got a disabled clerk who was familiar with the program and let us set up our own portfolio. We still see trading fees, but we managed to mimic a CCP portfolio with low MERs - just around 1%. I have heard of others finding banks that allowed self-directed RDSPs since we set up ours, but I cannot remember where.

Goldielocks

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Re: RDSP = Free Money (no, I'm serious!)
« Reply #3 on: February 08, 2019, 02:46:53 AM »
That's terrific news!   The RDSP is a very good vehicle, once set up.   There is an equal amount of paperwork if you want to claim the provincial support, or CPP disability (after a person has contributed and then is disabled).... but I believe you can only get the RDSP after you get the disability tax credit paperwork done, too, so I hope that will help with your own taxes.

For others looking into this -- if you are an adult and did not claim RDSP, and your medical reports / forms state that the disability was present in prior years, the government will help you to get retroactive payments for prior years.  Yeah, there is a wait / delay, but it eventually works, once all the correct and approved paperwork is in place.  It's not too late!

RDSP:

Canada Disability Savings Grant

The Canada Disability Savings Grant is a matching grant. That means that the Government also pays into your RDSP to help you save. The Government gives matching grants of up to 300 percent, depending on the beneficiary's family income and contribution. The maximum Grant amount is $3,500 per year, with a limit of $70,000 over your lifetime. Matching grants are paid into the RDSP on contributions that are made up to and including December 31 of the year you turn 49 years of age.

SerenaDarrin

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Re: RDSP = Free Money (no, I'm serious!)
« Reply #4 on: February 24, 2019, 07:53:54 PM »
but I believe you can only get the RDSP after you get the disability tax credit paperwork done, too, so I hope that will help with your own taxes.

Yes. From my own experience applying,  you can only have an RDSP if you are eligible for the disability tax credit. 

Quote
For others looking into this -- if you are an adult and did not claim RDSP, and your medical reports / forms state that the disability was present in prior years, the government will help you to get retroactive payments for prior years.  Yeah, there is a wait / delay, but it eventually works, once all the correct and approved paperwork is in place.  It's not too late!

Yes.  I did this too.  You can retroactively apply for the Disability Tax Credit (and ask for a reassessment of tax returns, as well!).  I think it's 10 years (I don't have my records in front of me) that you can go back.   The paperwork wasn't too bad, it just took quite a while to process.


CharlesBronzee

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Re: RDSP = Free Money (no, I'm serious!)
« Reply #5 on: July 19, 2019, 05:45:35 PM »
Free money indeed. Opened one up (a couple of years ago) for my son on the autism spectrum. We have so far contributed around $3500 but his account now has almost $9000 due to grants by the government. We opened one with TD.

Here’s a calculator that shows how much we can save for our loved ones future using this investment vehicle:

https://www.rdsp.com/calculator/