Navigating all 395 pages of the Registered Disability Savings Plan (RDSP) User Guide can be daunting because of the depth of information provided. Two terms encountered frequently are the beneficiary and the account holder. While these two roles are linked, they represent different responsibilities within the plan.
The beneficiary
Simply put, the beneficiary is the person who will receive money from the RDSP. They must have a severe and prolonged disability that makes them eligible for the Disability Tax Credit (DTC). They must also be a Canadian resident and have a valid Social Insurance Number (SIN). An RDSP can only have one beneficiary throughout its lifetime, and that beneficiary cannot be changed. Any withdrawals from the plan must be paid out to the beneficiary.
The account holder
The account holder is the designated decision maker for the RDSP. Typically, although not always, the account holder will be the legal parent(s) of the beneficiary. An RDSP must always have at least one account holder, but it can also have multiple joint holders at the same time. Key responsibilities of the account holder include:
Opening the account – Filing out paperwork at the bank or brokerage.
Setting up personal contributions – While anyone contribute money into the RDSP, that person must have written permission from the account holder to contribute directly. This allows the account holder to strategize deposits to maximize grants and bonds and not exceed the RDSPs $200,000 lifetime personal contribution limit.
Coordinating withdrawals with the financial institution – Directing payments from the RDSP to the beneficiary or there estate if they pass away.
Can the beneficiary and account holder be the same person?
The answer is, it depends. The eligibility rules depend on the beneficiary’s age and “contractual competence”, which is their legal capacity to understand and manage their own financial affairs.
If the beneficiary is a minor under the age of 18 or 19 (depending on province or territory where they reside), then the account holder would be a legal parent, legal guardian or or a public agency authorized to act on the child’s behalf.
If the beneficiary is the age of majority (18+/19+) and contractually competent, then the adult beneficiary must be the sole holder of their own RDSP if they are opening it for the first time. The Qualifying Family Member (QFM) provision is not accessible in this situation.
If the beneficiary is the age of majority (18+/19+) and their contractual competence is “in doubt” then a QFM, who could be a spouse, parent, or sibling, would be the account holder. The QFM rule is a temporary placeholder and is set to expire at the end of 2026. After 2026, the usage of the QFM to open a new RDSP will not be permitted, nor will adding or changing QFMs in existing accounts. If a QFM is the account holder of an RDSP at the end of 2026, they will still be allowed to continue to manage the account.
If a legal parent opened an RDSP for a child who has now reached the age of majority and is contractually competent, the parent may elect to transfer holder status to the beneficiary. Alternatively, the parent may remain the holder after the beneficiary reaches adulthood, subject the rules of the the financial institution and provincial/territorial law (most provinces and territories have different laws). The parent and adult beneficiary may also become joint holders, with each party having rights regarding contributions, withdrawals and investments. However, the adult beneficiary cannot remove the account holder parent from the RDSP unless the parent consents to relinquish their status as account holder.
In the situation where the QFM is the account holder of an existing RDSP and the beneficiary who’s contractual competence was “in doubt” later demonstrates to be contractually competent, then the same rules apply as above and the parent can elect to assign the holder rights over to the child entirely, keep the child on as a joint account holder alongside them, or remain the sole account holder. Again, if the QFM was a spouse, common-law partner or sibling, then the QFM must be removed as account holder and replaced by the beneficiary, also contingent on the beneficiary making a written request.
Lastly, if a legal representative has been appointed for the beneficiary, the QFM would be removed, and the legal representative should be assigned as account holder of the RDSP.
Note on joint accounts
When an account has joint holders, it is governed by a contract with the financial institution. Under Canadian banking and contract law, joint holders have equal rights to the account and one party cannot alter or override the legal rights of the other party without their consent. Furthermore, most banks in Canada banks will not allow a name to be removed from a joint account via a simple request or update. This is a general principle that applies across most joint financial accounts in Canada (checking accounts, savings accounts, and RDSPs). In order to modify a joint account, most banks would require all joint holders to agree, otherwise formal legal action would be necessary.