Video: Registered Disability Savings Plan contributions and rollovers

Transcript

Contribution

A contribution is an amount paid into a Registered Disability Savings Plan (RDSP) for the beneficiary.

The holder can contribute or can provide the issuer with written consent authorizing someone other than the holder to contribute.

All contributions made, belong solely to the beneficiary.

Conditions for contributions

At the time of contribution, the beneficiary must be:

• a resident in Canada
• eligible for the Disability Tax Credit (DTC), and
• 59 years of age or under as of December 31 of the year the contribution is made

The contribution lifetime limit is $200,000.

Retirement savings rollover

Parents or grandparents of a financially dependent child or grandchild can arrange to rollover some of their retirement savings. This rollover is on a tax-deferred basis, to their child or grandchild’s RDSP when they pass away. However, the rollover must respect the $200,000 lifetime contribution limit.

Education savings rollover

A Registered Education Savings Plan (RESP) subscriber and a RDSP holder can rollover the accumulated income payment under the RESP to the RDSP. At the time of the rollover, the RESP beneficiary must also be the beneficiary under the RDSP. The rollover must respect the $200,000 lifetime contribution limit.

In addition, one of the following conditions apply:

• postsecondary education is not possible because of  mental impairment, or
• the RESP is over 10 years old and all beneficiaries are over 21 years old and not pursuing postsecondary education, or
• the RESP is over 35 years old

Please note that a retirement savings rollover and an education savings rollover will not attract the Canada Disability Savings Grant.

Knowledge check

Time for a knowledge check.

The latest date a contribution made into a beneficiary’s RDSP is:

1. December 31 of the year the beneficiary turns 60
2. December 31 of the year the beneficiary turns 49
3. December 31 of the year the beneficiary turns 59
4. December 31 of the year the beneficiary turns 65

• Answer

  The answer is :

  3. December 31 of the year the beneficiary turns 59