Video: Registered Disability Savings Plan withdrawals, repayments and plan closure

Transcript

Withdrawals

There are 2 types of withdrawals made from a Registered Disability Savings Plan (RDSP):

• a disability assistance payment (DAP) is a withdrawal made on request to the beneficiary or their estate
• a lifetime disability assistance payment (LDAP) is a withdrawal, which once started, cannot stop and must be paid at least once a year until the beneficiary is deceased or the plan is terminated

Repayment of CDSG and CDSB

When closing an RDSP, the issuer must repay all the CDSG and CDSB that has been in the RDSP for less than 10 years to the Government of Canada. This consists of the assistance holdback amount.

Withdrawals made from an RDSP, requires the issuer to repay the lesser of the following amounts to the Government of Canada:

• $3 for every $1 withdrawn (the proportional amount), or
• the assistance holdback amount

You cannot regain any repaid CDSG and CDSB.

Plan closure reasons

The issuer will need to close the RDSP when one of the following events or reasons occurs:

• the beneficiary is no longer eligible for the Disability Tax Credit (DTC) and the holder requests to close the plan
• the RDSP is non-compliant with current legislation and the plan is de-registered
• the beneficiary is deceased
• the RDSP is transferred to another issuer
• other

The reason 󠄑“other” is only for the following situations:

• there is no property left in the RDSP
• only the assistance holdback amount is left in the RDSP
• the holder requests a withdrawal of all remaining funds in the RDSP and the amount is within the applicable payment rules and limits

Prior to closing an RDSP, the issuer shall repay to the Government of Canada the assistance holdback amount.

Knowledge check

Time for a knowledge check.

1. Which events require the closure of an RDSP? Choose all that apply. Is it:
   1. loss of eligibility for the DTC
   2. RDSP non-compliance
   3. moving to another city  
   4. death of the beneficiary

• Answer

  The answer is:

  2. RDSP non-compliance

  4. death of the beneficiary