A Registered Disability Savings Plan (RDSP) is one of the most generous, yet unknown, financial tools available to Canadians living with disabilities. Despite the benefits, it is estimated tha only 36.3% of eligible Canadians have opened an RDSP as of 2022.
What is an RDSP?
Simply put, an RDSP is a registered tax deferred savings plan designed to help people with disabilities save for their long-term financial security.
Who can open an RDSP?
The RDSP beneficiary must be a resident of Canada with a valid Social Insurance Number (SIN), under 60 years of age, and be approved for the Disability Tax Credit (DTC). The plan can be opened by the beneficiary themselves or a holder who is a person or an organization who manages the plan on behalf of the beneficiary. The beneficiary and holder can be the same person.
How does it compare to the RRSP and TFSA?
A Registered Retirement Savings Plan (RRSP) has tax deductible contributions, meaning for every dollar contributed into the account, that same amount is subtracted from total income before taxes are calculated. The account is also tax deferred, so money inside the account grows tax free until it is withdrawn. When money is withdrawn the full amount of the withdrawal including both original contributions and growth counts as taxable income, so taxes are paid based on the individuals marginal tax rate. Lifetime limits are the sum of 18% earned income (up to a yearly cap) and any unused room carries forward from unused previous years.
A Tax-Free Savings Account (TFSA) is funded with after tax dollars, meaning contributions do not provide tax deductions. Any investment growth within the account is exempt from taxation, and withdrawals are tax free. For 2026, the cumulative lifetime contribution limit for a TFSA is $109,000 for anyone who has been at least 18 years old and a resident of Canada since the program began in 2009.
While the RRSP and TFSA are advantageous tax sheltering accounts, neither offers free contributions from the federal government in the form of grants and bonds, which is why the RDSP such a powerful wealth building tool for Canadians with disabilities. Even modest personal contributions can grow significantly due to government matching and compound interest.
Free money you say?
Yes. This is why the RDSP is so unique. The federal government provides two types of payments, namely the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB).
Canada Disability Savings Grant (CDSG)
The government matches personal contributions based on adjusted net family income.
- If adjusted family net income is $117,045 or less, the government contributes a 3 to 1 match for the first $500 = $1,500 grant.
- For the next $1,000, they provide a 2 to 1 match = $2,000 grant.
- The total result for $1,500 of personal contributions is $3,500 in grants.
- If adjusted family net income is greater then $117,045, the government contributes a 1 to 1 match for the first $1,000 = $1,000 grant.
- The total result for 1,000 personal contributions in $1,000 in grants.
- Lifetime grant limit is $70,000 regardless of income.
Canada Disability Savings Bond (CDSB)
No personal contributions are required to receive the bond.
- If adjusted family net income is below $38,237, the government automatically deposits $1,000 a year into the account.
- If adjusted family net income is above between $37,487 and $58,523, a prorated bond amount based on the formula in the Canada Disability Savings Act is contributed into the account.
- If adjusted family net income is greater than $58,523, no bond is deposited into the account.
- Lifetime bond limit is $20,000.
Note: Starting in the calendar year the beneficiary turns 19, “income” shifts from family income, which is their own income plus their parents or guardians income(s) to personal income plus their spouse or partners income (if applicable). So, depending on the combined family income before the beneficiary turns 19, and their projected adjusted net family income after, there may be a viable strategy to delaying some contributions.
Note 2: RDSP grants and bond entitlements are determined by adjusted net family income from two years prior. So in 2026, grant and bond amounts would be calculated using data from 2024 income taxes.
Check out the Grant and Bonds calculator
Is there a personal contribution limit?
Yes, an RDSP has a lifetime personal contribution limit of $200,000. This includes personal contributions and roll overs from other registered accounts such as the Registered Education Savings Plan (RESP) or a RRSP, or Registered Retirement Income Fund (RRIF) from a deceased parent or grandparent. Government grants and bonds do not count towards the $200,000 lifetime limit, nor do investment gains or interest earned in the account. There is no annual limit to how much can be deposited, so long as the total amount is under the lifetime limit.
What are the carry forward grant and bond rules?
If the beneficiary has been DTC eligible for years in the past and just opened an RDSP, they can catch up on unused grants and bonds from the past 10 years. Similarly, if they have opened an RDSP but have not maximized personal contributions, they can also catch up on unused grants. Carry-forward on grants has a $10,500 annual limit, and bonds has a $11,000 annual limit. Lifetime grant and bond limits of $70,000 and $20,000, respectively still apply. However, carry forward amounts can only be used until December 31 of the year the beneficiary turns 49. Once the beneficiary turns 50 years of age, the carry forward rule becomes null and void and the government will no longer pay grants or bonds into the RDSP.
What investments can be made inside an RDSP?
Much like an RRSP, RRIF, RESP or TFSA, an RDSP can hold various types of investments such as stocks, bonds, ETFs, mutual funds, GICs or savings accounts allowing beneficiaries to select investment strategies that align with their long-term goals. Not all banks or brokerages offer the same types of investments so it is important to do proper research before selecting a financial institution.
The 10 year repayment rule
RDSPs are designed for long term savings, not short-term emergency use, so there are strict rules around withdrawals. Any early withdrawal from the plan will trigger a repayment of grant and bonds paid during the preceding 10 years.
The Proportional Repayment Rule states that if the beneficiary withdraws money early, they must repay $3 of government grants/bonds for every $1 they withdrawal from the money received in the 10 years prior.
What happens at age 60?
In the year the beneficiary turns 60 years of age, at least a full decade has passed since the last eligible government grant or bond (which ends at age 49). This means the 10 year claw back rule no longer applies, and withdrawals are allowed to begin without repayment penalties.
Consequently, the government requires mandatory Lifetime Disability Assistance Payments (LDAPs) to commence by the end of the year the beneficiary turns 60.
Does having an RDSP affect provincial/territorial asset limits?
One of the best features of the RDSP is that it is exempt when determining financial eligibility for disability benefits for all 13 provinces and territories in Canada. This means having money inside an RDSP that exceeds asset limits will not disqualify recipients from provincial support payments.
How are payments from an RDSP taxed?