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Benefits of a Registered Disability Savings Plan
- Plan deposits can grow on a tax-deferred basis. While contributions to an RDSP are not tax deductible, income earned on plan deposits grow on a tax-sheltered basis until the funds are withdrawn. Amounts withdrawn from an RDSP are taxed as ordinary earned income.
- RDSP deposits are eligible for the Canada Disability Grant (CDSG). Contributions to an RDSP may qualify for federal government grants of up to $3,500 per year.
- The RDSP program may qualify for additional payments under the Canada Disability Savings Bond. Lower-income families who wish to participate in an RDSP may be eligible for annual payments of up to $1,000 per year.
- Up to $200,000 may be contributed to an RDSP over the life of the plan per beneficiary. Deposits can be made in lump sum or periodic payments and will be accepted by the plan until the end of the year in which the beneficiary turns age 59, deceases, no longer is deemed a Canadian resident, or no longer qualifies for the CRA’s individual disability tax credit.
- A wide selection of investments qualifies for inclusion under an RDSP. Eligible investments may include bonds, guaranteed investment certificates (GICs), mutual funds, savings accounts, stocks as well as other kinds of securities.
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