Registered Disability Savings Plan (RDSP) Frequently Asked Questins (FAQ) - Clients PLAN OVERVIEW What is a Registered Disability Savings Plan (RDSP)? A Registered Disability Savings Plan (RDSP) is a registered savings plan fr Canadians living with a disability. Its purpse is t help thse wh are disabled, their parents and thers t save fr the lngterm financial security f Canadians with disabilities that are eligible fr the Disability Tax Credit. OPENING AN ACCOUNT Hw can I set up a Cmmunity Trust self-directed RDSP accunt? Fr infrmatin n hw t set up an RDSP, cntact yur financial advisr r call Cmmunity Trust at 1-416-763-2291. ELIGIBILITY Wh can be named a beneficiary t an RDSP? Any persn can be a beneficiary f an RDSP prvided that they are eligible t claim the Disability Tax Credit (DTC) and have received ntificatin f apprval frm CRA. Visit http://www.cra-arc.gc.ca/ r speak t yur financial advisr fr mre details. Can I name mre than ne beneficiary in the RDSP? N, nly ne beneficiary per plan is permitted acrss all financial institutins. Can I have mre than ne RDSP per beneficiary? N, nly ne RDSP per beneficiary is permitted. Cmmunity Trust Cmpany Page 1 f 5
Wh can pen an RDSP? When Beneficiary is a Minr (under 18 in mst prvinces). The legal parents r a guardian and agency legally authrized t act fr the minr beneficiary may set up a plan and remain hlders f the plan until the beneficiary becmes an adult. The beneficiary may becme a c-hlder f the plan upn turning 18 years f age.* When Beneficiary is an Adult (18 r lder in mst prvinces) If a beneficiary is cntractually cmpetent, then he/she must be the hlder f the plan.* *Where, in the pinin f an RDSP issuer, an individual s ability t enter int a cntract is in dubt, the spuse, cmmn-law partner, r parent f the individual will be cnsidered a qualifying family member and will be eligible t establish an RDSP fr the individual (i.e., be the plan hlder f the RDSP). Can there be mre than ne accunt hlder under an RDSP? Yes. The legal parents f the beneficiary can bth be accunt hlders under the plan. Additinally, the parents and the beneficiary can als be jint hlders under the plan nce the beneficiary reaches age f majrity. Des the accunt hlder need t be a resident f Canada? N. The accunt hlder des nt have t be a resident f Canada prvided that the beneficiary was a resident f Canada when the plan was pened and when each cntributin was made t the plan. Can the accunt hlder f an RDSP be changed? Yes. Over the lifetime f a plan, the accunt hlder can change. Please speak with yur financial adviser wh can discuss all f the varius scenaris with yu. Hw d I cmplete a Disability Tax Credit Certificate (DTC)? 1. Visit www.cra-art.gc.ca and dwnlad Canada Revenue Agency Frm T2201. 2. Part A must be cmpleted by the intended beneficiary f the RDSP (r their representative)*. 3. Part B must be cmpleted by a qualified practitiner** *A representative is smene wh can be legally appinted t act n the beneficiary s behalf regarding matters pertaining t incme tax. T designate (r cancel) smene t act as yur representative, Canada Revenue Agency Frm T1013 must be cmpleted. **A qualified practitiner includes, but is nt limited t, medical dctrs, ptmetrists, audilgists, ccupatinal therapists. A cmplete list can be fund n www.cra-arc.gc.ca. Cmmunity Trust Cmpany Page 2 f 5
CONTRIBUTIONS Wh can cntribute t an RDSP? Anyne can make a cntributin t an RDSP. Written cnsent frm the accunt hlder is required. Hw much can I cntribute t an RDSP? Yu may cntribute up t $200,000 per beneficiary during the lifetime f the RDSP. There is n annual cntributin limit. Hw lng can I cntribute t an RDSP? Cntributins can be made t a plan until the earliest f: December 31st the year in which the beneficiary reaches 59 years f age; r The time when cntributins t the plan ttal $200,000; r The time when the beneficiary n lnger qualifies fr the DTC; r The beneficiary is n lnger resident in Canada fr tax purpses; r The beneficiary s death. Are cntributins tax-deductible? N. Hwever, the grwth n RDSP cntributins is tax-deferred while held within the plan. Are investment prducts available fr purchase within a Cmmunity Trust RDSP accunt? Yes. Yu can chse frm a number f investment ptins fr yur RDSP. Fr mre infrmatin abut qualified investments, speak t yur financial advisr r cntact Cmmunity Trust. Can I set up autmatic cntributins fr my RDSP? Yes. Setting up autmatic RDSP cntributins at regular intervals thrughut the year is easier n yur budget and a cnvenient way t reach yur target cntributin amunt befre the December 31 st deadline each year. Gvernment Grant & Bnd T encurage lng-term savings thrugh an RDSP, the Gvernment f Canada created the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bnd (CDSB). What is the Canada Disability Savings Grant? The CDSG is a federal gvernment grant that prvides matching cntributins f 100%, 200% r 300% up t $3,500 annually, based n a family s net incme. There is a lifetime limit f $70,000. What is the Canada Disability Savings Bnd? The CDSB frm the federal gvernment is paid annually int the RDSPs f lwer t mdest-incme families. A tax return must be filed t be eligible fr the CDSB, specifically; a tax return must be cmpleted tw years prir t the year fr which yu are intending t attract a bnd. Please speak t yur financial advisr fr cmplete details regarding yur eligibility. Cmmunity Trust Cmpany Page 3 f 5
What is the deadline fr annual grants and bnds? December 31 is the deadline fr grant and bnd cnsideratin. What is the maximum age when a beneficiary can receive grant r bnd mnies? A beneficiary can receive the Canada Disability Savings Grant and Canada Disability Savings Bn payments up until December 31 f the year the beneficiary turns 49 years ld. After this date, they will n lnger receive grant r bnd mnies. Can I receive additinal grants and bnds frm previus years? Yes. Beginning in 2008 and fr a maximum f 10 years, unused grants can be carried frward, giving yu the pprtunity t catch up by cntributing mre than $3,500 a year. Nte that when catching up, the maximum payable in any ne year is $10,500 fr grants and $11,000 fr bnds. Hw are grant and bnd payments credited t my accunt? Grant payments will be credited t the RDSP accunt n a mnthly basis, based n transactins prcessed in the previus mnth. Fr example, cntributins made in January will have any qualifying grant credited at the end f February. Bnd payments are nt credited based n cntributins t the accunt. Qualifying bnd payments will be credited t the accunt at the end f the mnth fllwing the accunt pening. On a yearly basis, qualifying bnd payments will be credited in January/February. PAYMENTS & WITHDRAWALS What types f withdrawals are permitted frm an RDSP? There are tw types f withdrawals, knwn as payments : Lifetime Disability Assistance Payment (LDAP) Disability Assistance Payment (DAP) We recmmend that yu speak with yur financial advisr fr a cmplete verview f the cnditins and limitatins assciated with LDAPs and DAPs. Wh pays the taxes n payments frm an RDSP? Withdrawals are payable nly t the beneficiary and therefre taxed in the hands f the beneficiary r their estate, in the case f the beneficiary s death. Yur financial advisr can prvide yu with mre detail regarding this issue. Cmmunity Trust Cmpany Page 4 f 5
OTHER What happens shuld the beneficiary die? Upn the death f the beneficiary, all Grants and Bnds received in the 10 years preceding the beneficiary s death must be returned t the gvernment. The remaining prceeds f the plan Grants and Bnds lder than 10 years, incme grwth and accunt hlder cntributins will pass t the beneficiary s estate. The prceeds f the plan will be distributed accrding t the individual s will. If the individual dies withut a will, the funds will be distributed accrding t prvincial estate laws. D I receive an accunt statement? Cmmunity Trust RDSP clients will be issued an annual statement alng with 24/7 n-line access t their accunt infrmatin. D RDSPs impact ther federal gvernment prgrams? N. RDSPs d nt affect ther incme-based federal gvernment prgrams including: Old Age Security (OAS); Guaranteed Incme Supplement (GIS); Canada Pensin Plan (CPP); and the Gds and Services Tax Benefit (GST) t name a few. In mst prvinces and territries, RDSP benefits d nt impact existing prvincial scial assistance supprt prgrams. Speak with yur financial advisr r check with yur prvince s gvernment ffices t cnfirm RDSP benefit exemptin in yur area. What is a Hensn Trust? Hw can a Hensn Trust cmplement my RDSP? A Hensn Trust is a legal arrangement that wrks well with an RDSP and can play an imprtant rle in planning fr the financial well-being f a relative with a disability, especially when an inheritance is invlved. With a Hensn Trust and an RDSP, yu can arrange t maximize supprt available frm varius levels f gvernment grants and bnds frm the federal gvernment thrugh an RDSP and cntinued prvincial disability-related incme supprt, regardless f the amunt held in trust. Please speak with yur financial advisr fr mre detailed infrmatin abut Hensn Trusts. Nthing in this cmmunicatin shuld be cnstrued as the prvisin f legal r tax advice by Cmmunity Trust Cmpany. Please cnsult a qualified tax r legal prfessinal shuld yu require such advice. Cmmunity Trust Cmpany Page 5 f 5