Registered Disability Savings Plan (RDSP) FAQ Thread

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Feb 1st, 2021 1:32 am

islander59 [OP]: Sr. Member; Dec 5, 2011; 998 posts; 1127 upvotes

Feb 1st, 2021 1:32 am

Registered Disability Savings Plan (RDSP) FAQ Thread

It's been a while so I thought I would clean up this thread a bit. I have added a thread summary with all the additional information that was posted in the OP.

WHAT IS AN RDSP?

The Registered Disability Savings Plan (RDSP) is a Canada-wide registered matched savings plan specific for people with disabilities. Here are some basics:

For every $1 put in an RDSP account, the federal government can (if your family income is below $106,717) match with up to $3! This is the Canada Disability Savings Grant.
For people living on a low-income (less than $34,863), the federal government will put in $1000 each year for 20 years! This is the Canada Disability Savings Bond.
For people living on an income between $34,863 – $53,359 they can still receive a partial bond.
Anyone can contribute to an RDSP- family, friends, neighbours… it gives people who want to help a way to do so!
The money can be invested to grow- we have heard that it is the best Return on Investment available. Depending on someone’s income, any money saved immediately triples in value. Once investment decisions are made, it can really start to grow!
The RDSP is exempt from most provincial disability and income assistance benefits. It does not get clawed back and it does not reduce disability benefits payments. Click here to find out how your province treats the RDSP.
People with disabilities can choose what to do with the money when it comes out-there are no restrictions on how the money can be spent!

source: www.rdsp.com

UPDATE: You can now open an RDSP completely online at TD Direct Investing!!

Last edited by islander59 on Jan 13th, 2023 3:00 pm, edited 26 times in total.

Thread Summary

WHAT IS AN RDSP?

A registered disability savings plan (RDSP) is a savings plan that is intended to help parents and others save for the long term financial security of a person who is eligible for the disability tax credit (DTC).

You can watch these really quick CRA RDSP information videos to get a simple summary of the rules and benefits. It includes the following 3 Modules:

Module 1: Start Saving for the Future
Module 2: Grants and Bonds to Make Your Savings Grow
Module 3: Taking Money Out

GRANTS & BONDS

The amount of the grant is based on the beneficiary’s adjusted family net income as follows: The beneficiary adjusted family net income thresholds are indexed each year to inflation. The income thresholds shown are for 2021.

Amount of CDSG grant when family income is at or below the top matching threshold (2021 = $98,040):

on the first $500 contribution—$3 grant for every 1 dollar contributed, up to $1,500 a year
on the next $1,000 contribution—$2 grant for every 1 dollar contributed, up to $2,000 a year

Amount of CDSG grant when family income is more than $98,040 the matching threshold (2021 threshold) :

on the first $1,000 contribution—$1 grant for every 1 dollar contributed, up to $1,000 a year

The Application for Canada Disability Savings Grant and/or Canada Disability Savings Bond [ESDC EMP 5608] is explained thoroughly in detail so Issuers (Bank Reps) fill out and understand the forms.

1. The matching RATE for grants will be the same rate that would have applied if the contribution has been made in the year in which the grant entitlement was earned

2. The AMOUNT of unused grant and bond entitlements depends on the family income established for the particular year that the unused entitlement was earned.

Section 7 of The Application form states:

"The amount of grant and bond entitlement for a given year depends on the beneficiary's family income of the second preceding tax year (for example, 2014 amounts are based on 2012 family income)"

"Personal Income Tax
ESDC will use the beneficiary’s family income (including spousal income) to determine eligibility for the grant and/or the bond, for all calendar years in which the beneficiary is 19 years old or older. The income data from two years back is used to establish family income (example: 2013 uses income information from 2011). If tax returns have not been filed, no bond will be paid and the matching grant rate will be 100%."

If your net income is above the top threshold for the year, you will not be entitled to any grants at the 3x or 2x matching rate in the year the entitlements were earned. You would only be entitled to grants at the 1x matching rate in the year that you earn the entitlements.

For people living on an income between $32,028 – $49,020 they can still receive a partial bond.

Bonds are based on your net income (line 236) from 2 years prior. So, the bond you get in 2021 will be based on your 2019 net income. If your income increases in 2020, you won't see the impact on the bond until 2022.

It is easier to understand everything if you try out the [https://docs.google.com/spreadsheets/d/ ... ue&sd=true]RDSP GRANTS & BONDS CALCULATOR[https://docs.google.com/spreadsheets/d/ ... sp=sharing). I have made an example to explain the calculator in post #14

HOW DO CARRY FORWARDS WORK?

The government matching rules can seem very complicated. But the benefits outweigh any stress caused by trying to understand them.

Here is an example I adjusted for a low income DTC holder who just opened their RDSP account in 2021. In this scenario, to maximize the matching carry-forward grants/bonds, the following contributions need to be made over 5 years:

$3,500 in 2021
$4,000 in 2022
$5,000 in 2023
$5,000 in 2024
$4,000 in 2025

In this scenario, the DTC holder would get $65,500 over 5 years in matching carry-forward grants and bonds.

Summary

Total private contributions $21,500
Total CDSGs $50,500
Total CDSBs $15,000
Total value in RDSP* $87,000

It is important to remember that carry-forwards can only go back 10 years, regardless if your DTC is backdated more than 10 years. So, getting money into the RDSP asap is best.

WHAT IF MY INCOME VARIES EACH YEAR?

For those with varied net incomes that are above and below thresholds, a awesome reddit user, geraminalun made this RDSP GRANTS & BONDS CALCULATOR that lets you calculate how much you will receive in grants and bonds depending on your income and contributes made. It even calculates the carry-forward amounts too! Here is a very good thread about how to calculate the Grants & Bonds

HOW DO I USE THE RDSP GRANTS & BONDS CALCULATOR?

The calculator is a Google Sheets template that you can copy/download. Note that this link is for view only (it is my template), so you will not be able to modify it directly. But you should be able to either download an equivalent or make a copy to your own Google Docs account.

You need to fill in the white section properly, including all the years eligible, since eligibility is a big deal in RDSP stuff. If the beneficiary was 18 or younger, their parent's income is used to calculate the bond/grant entitlements. Once the beneficiary turns 19, their income (and spousal if applicable) is used in the calculations. Remember that grants/bonds are based on the income from 2 years prior, so make sure the beneficiary starts filing income tax returns when they turn 17. If tax returns have not been filed, no bond will be paid and the matching grant rate will be 100%.

Instructions

1 - set the beneficiary’s birth year top left, row 4
2 - set NO in column D ("Eligible") for each year from birth until the year of column A for which the beneficiary became eligible for the DTC
3 - set YES in column D for the year the beneficiary became eligible and subsequent
4 - input the beneficiary's or parent's net income from your Notice Of Assessment
5 - enter the $ amount you will/have contributed to the RDSP

Generally speaking:

primary goal is to reach 70k in column AM (total lifetime grant limit),
secondary goal that the sheet does include is to become NON-PGAP in column AS. NON-PGAP is the net calculation of (Contributions - (Bonds + Grants)). Note that this can be done by adding late contributions in column G, including rollovers from RESP and RRSPs up to certain amounts.

See post #14 for an example and instructions on how to use the RDSP Grants & Bonds Calculator.

AM I ABLE TO ROLLOVER/TRANSFER MY INVESTMENTS INTO AN RDSP?

In some situations, yes. All the information regarding transfers & rollovers is available on the CRA RDSP website.

HOW DO I QUALIFY FOR AN RDSP?

You need a Social Insurance Number, file your income taxes, are under the age of 60, and most importantly, you are eligible for the Disability Tax Credit (DTC)

HOW DO I GET THE DTC?

Getting the DTC can be the hardest part and can be a bit overwhelming.

Thankfully the rdsp.com website has lots of information and links to other resources. They even have links to a Step-By-Step Guide to becoming eligible, opening and managing your RDSP

If this still seems overwhelming, don't worry. It is a lot to process. When I was helping my brother with all this, I wanted to give up a few times. Just try to take it slow, step-by-step. Don't try to jump in headfirst. What really helped my brother was meeting with the Disability Alliance of BC. They are a non-profit that helps and advocate for British Columbians with disabilities. They interviewed my brother and completed all the forms for him. It took a lot off his shoulders. I suggest you find out which disability advocacy organizations are in your area. I will update this post with links for other provinces when I find them.

FYI you MUST open an RDSP in person. There is no way around this. Call ahead and make sure to meet with someone who knows how to open an RDSP. Few bank reps actually have experience with opening RDSP accounts.

WHICH BANKS/BROKERAGES OFFER RDSPs?

TD DI is the most popular choice AND it can be opened online:

It has the most intuitive platform that is easy to learn.
TD DI trading fees are higher - $9.99/trade but $0 mutual funds
they don't charge any admin fees
everyone in the household gets the minimum balance admin fees waived also
offer a free basic account for RDSP holders

This is how you open an RDSP via TD (thanks to @Bleys007 for the info)

Bleys007 wrote: ↑ I logged in using my TD account, but the same prompts appear to come up if I click on "Don't have a TD online login"

https://www.td.com/ca/en/investing/dire ... ounts/rdsp

Apply online button, login with TD account (or don't have a TD online login)

Account types - click show more and check off RDSP. Canadian resident, received letter from CRA: both yes. Scroll down: continue.

Note that you have to be a Canadian resident, have a SIN, upload government ID, have a personal email (LOL), and print and sign RDSP forms. Continue again.

Read docs that it mentions (or not. I'm not your boss) and check the box and continue.

Enter lots of info.

Etc... It's really straight forward, albeit a bit tedious (including printing out paper docs and scanning them)

It literally opened up my account on the spot, but when I went to contribute, they told me it had to be open 24 hours. I called back yesterday, did the contribution on the phone, and they said 48 hours to appear in the RDSP.

9/10 experience, surprisingly.

National Bank is less popular

can be more/less expensive depending on account balance and frequency of trades.
It doesn't waive the admin fees which are $100/year if your balance is below $20k
I would not suggest this option for beginners who are unfamiliar with investing

You can read a reddit thread about comparing National Bank's RDSP to TD DI here.

Regardless of which type of RDSP account you open, there is one enormous caveat you need to be aware of - in order to get the matching grants/bonds, your deposits MUST be identified and registered by your financial institution. So the rule of thumb is to make sure you speak with whoever handles your RDSP before you make a contribution!

DON'T TRANSFER ANY FUNDS TO YOUR RDSP BY YOURSELF!

My brother has an RDSP at TD DI. The system is pretty old school and you need to make sure your deposits are registered in order to get the grants and bonds. You will need to call TD DI and have them deposit the funds. It takes about 2 business days for the money to be transferred. You can get the money to TD DI in several ways. You can bill pay into a TD DI CASH ACCOUNT and call them to transfer it into your RDSP. You can deposit money into your TD checking/savings account and have TD DI move it into your RDSP. If you have a good relationship with your TD advisor/rep, you can email them and ask them to set up the transfer so you don't have to call in. But most have no idea what to do so YMMV. I know you can go into a branch and deposit money/cheque but that is a very long and pretty unnecessary process.

My brother just deposits one lump sum at the start of each year to make the process as simple as possible. It's always busy at the start of the year so you will have a long wait time on the phone unless you get lucky. It's a little bit of pain for a lot of gains.

WHAT SHOULD I INVEST IN?

Well, that depends on the level of risk you can tolerate. You can use one of the risk tolerance calculators online and from there decide what kind of investments you want. For very conservative RDSPs you could purchase GICs, government bonds, or just deposit into an eligible RDSP savings account.

If you want your investments to grow bigger and faster, you could invest in mutual funds and/or ETFs, stocks, equities. However, TD e-series mutual funds have lower MERs than any other I have seen for broad, full market coverage index investing.

Mutual funds tend to have a much higher Management Expense Ratio (MER) vs ETFs, stocks, equities
If you just want a really simple solution you can buy an all-in-one asset allocation index ETF that rebalances itself. You just buy it and forget it until the next year. You can check out www.canadiancouchpotato.com for their Model Portfolios. The site suggests Vanguard, iShares, and TD e-series mutual funds.

When I was first learning about investing, I was overwhelmed and just started with XBAL (60% equities / 40% bonds). It was a super simple way to get my money invested while I learned more about what I want in my portfolio. As the saying goes "time in the market beats timing the market" If you want to learn more about ETF investing, I suggest watching (Portfolio Manager, MBA, CPA, CFP) Ben Felix's YouTube series "Common Sense Investing" because he backs up all his statements with peer-reviewed studies. He cites everything and his advice is all based on statistics. So if you've spent way too much time in academia and just can't take anyone seriously unless they cite their sources, then the Common Sense Investing is for you! Here's his video about Asset Allocation ETFs He is also a moderator of r/PersonalFinanceCanada if you want to check him out

That's all for now. I will update this post when I have time. I recommend that you read through this recent thread and also take a look through reddit. The Personal Finance Canada subreddit has lots of great info but it is all scattered around. I highly you search r/PersonalFinanceCanada and also use [url=http://redditsearch.io/?term=RDSP&datav ... earch=true&

782 replies

Feb 1st, 2021 5:04 am

RCML27: Deal Addict; May 28, 2007; 1735 posts; 1139 upvotes

Feb 1st, 2021 5:04 am

Any benefit to putting money into this if you're 58 and not eligible for the grants or bonds? Would this help in terms of applying for social or disability assistance programs where RDSP money is not counted as assets or income (other than the taxable portion of the withdraw)?

+2

Feb 1st, 2021 8:42 am

hoob: Deal Fanatic; Jan 6, 2002; 6692 posts; 7367 upvotes; Toronto

Feb 1st, 2021 8:42 am

How about some use cases? WTF is a RDSP and why would I need one or calculate an opportunity of needing one?

Si Tacuisses, Philosophus Mansisses

+1

Feb 1st, 2021 12:58 pm

islander59 [OP]: Sr. Member; Dec 5, 2011; 998 posts; 1127 upvotes

Feb 1st, 2021 12:58 pm

RCML27 wrote: ↑ Any benefit to putting money into this if you're 58 and not eligible for the grants or bonds?

Basics:
You can open an RDSP until Dec 31st in the year you turn 59.
Matching grants and bonds are not offered past the age of 49.

Benefits for opening after age 49:
You are eligible for all the bank/credit union/brokerage benefits until your RDSP closes (age 83 or when requested by the beneficiary):
Many banks and credit unions offer a free basic chequing account for the RDSP beneficiary

TD DI waives minimum balance threshold fees for the RDSP beneficiary's entire household

Money grows tax-free and you only pay taxes upon withdrawal on the following:

the government contributions (grants + bonds), AND
the capital gains, interest, dividends, etc. of BOTH the government contributions and your personal contributions.
The only amount you will NOT pay taxes on are withdrawals of your personal contributions.

New rules and benefits change over time so you might be eligible for some more benefits in the future.

Cons of opening after age 49:
If you don't have any gov contributions, an RDSP acts somewhat like a TFSA/RRSP - with a $200k lifetime personal contribution limit - insofar as it grows tax-free and is funded with after-tax income; thus, your personal contributions are not taxed BUT any capital gains, dividends, interest, etc. ARE taxed at your marginal rate.

**After 2017, the RDSP implemented Anti-Avoidance Rules. These are rules of wide application that counter aggressive tax planning undertaken to circumvent the overall spirit of the law. "The rules help prevent aggressive tax planning strategies, including those that purport to enable RDSP holders to access the plan’s funds without including these amounts in income."**
The advantages you gain by doing so would be taxed at 100%.

What is an advantage?

An advantage may generally be described as a benefit obtained from a transaction that is intended to unduly exploit the tax attributes of an RDSP/RESP, which could include a reduction in the value of an RDSP/RESP without a corresponding income inclusion. An advantage also includes certain other transactions including benefits from "swap transactions". These advantages will be subject to a tax that is generally equal to their fair market value, representing a 100% tax. As well, an advantage includes income earned on a prohibited investment after March 22, 2017.

So, in your case, you can't just dump your entire RRSP/RRIF into an RDSP to reap the tax benefits. There are no examples given or age determinants but I would assume dumping a large investment into an RDSP at age 58/59 would be considered an attempt to circumvent the spirit of the law.

RCML27 wrote: ↑ Any benefit to putting money into this if you're 58 and not eligible for the grants or bonds? Would this help in terms of applying for social or disability assistance programs where RDSP money is not counted as assets or income (other than the taxable portion of the withdrawal)?

None of the documents I have read so far say that you specifically can't use the RDSP to make yourself eligible for social or disability assistance programs. But these programs are often run by the province so YMMV. In BC, disability income assistance provides non-taxable income but is included on line 236. In contrast, CPP-Disability is a taxable benefit. You are only eligible for CPP-D if you make less than $5,700/year not including provincial disability income assistance. The non-taxable benefits would probably be subject to the anti-avoidance rules so again, I am not sure if this would help in your particular circumstance.

There are so many conflicting rules between provincial rules and federal rules that it can be a mess to untangle. RDSPs are relatively new and judges have only ruled on a few cases. So you often find out if something is valid/eligible after the province or federal government comes after you or you lose out on benefits. It is very much a "shoot now, ask questions later" scenario.

For example, in BC, a woman was kicked out of her subsidized housing because she inherited money from her family's estate. The money went directly into her Qualified Disability Trust which shouldn't have any barring on BC Housing eligibility. She went to trial and it was ruled that she was unfairly kicked out and should be allowed to go back. However, the suite she had was now occupied and she had to go back on the waiting list. So even when you don't do anything wrong, you could get the s**ty end of the stick. Honestly, qualified disability trusts, Henson trusts, and RDSPs have very little judicial precedents so it can lead to very messy situations.

Last edited by islander59 on Aug 4th, 2023 11:42 pm, edited 4 times in total.

+2

Feb 1st, 2021 1:19 pm

Labrie: Sr. Member; Feb 7, 2004; 590 posts; 423 upvotes; St Thomas

Feb 1st, 2021 1:19 pm

I have an appointment next week to open one of these for my son. The original T2201 was sent to the CRA so I no longer have it but I have a 'Notice of Determination' from the CRA confirming his eligibility for the DTC. Is this sufficient for the bank as proof or do they need something else?

Also with regards to the grants, his disability was backdated to his birth in 2011. My taxable income for that year was in the amount that he would be eligible for 3:1 match by the government. My income now is much higher and only eligible for 1:1 match. It's a bit confusing but from what I read, if I open the RDSP this year and make an additional contribution, will the government match at 3:1 because they use the earlier years income amount first as part of the carry-forward rules?

Feb 1st, 2021 2:05 pm

mastaj: Deal Addict; Dec 13, 2010; 1000 posts; 1646 upvotes; Vancouver

Feb 1st, 2021 2:05 pm

This is great @islander59 ! Perhaps add in the point you made in the other thread about not making the RDSP deposits yourself, but using the cash account and having the bank make the actual transfer to the RDSP account? That is a pretty important piece for people to understand, so that they get their grants properly!

+2

Feb 1st, 2021 2:08 pm

islander59 [OP]: Sr. Member; Dec 5, 2011; 998 posts; 1127 upvotes

Feb 1st, 2021 2:08 pm

Labrie wrote: ↑ I have an appointment next week to open one of these for my son. The original T2201 was sent to the CRA so I no longer have it but I have a 'Notice of Determination' from the CRA confirming his eligibility for the DTC. Is this sufficient for the bank as proof or do they need something else?

Also with regards to the grants, his disability was backdated to his birth in 2011. My taxable income for that year was in the amount that he would be eligible for 3:1 match by the government. My income now is much higher and only eligible for 1:1 match. It's a bit confusing but from what I read, if I open the RDSP this year and make an additional contribution, will the government match at 3:1 because they use the earlier years income amount first as part of the carry-forward rules?

I can't remember what my brother needed to provide to open an RDSP at TD DI, but I am pretty sure a Notice of Confirmation will be sufficient along with a valid ID, SIN, etc.

I agree, the government matching is complicated. But luckily an awesome reddit user, geraminalun made this RDSP Grants & Bonds Calculator that lets you calculate how much in grants and bonds you will receive depending on your income and deposits made. It even calculates the carry-forward amounts too! Here is the thread explaining it: https://www.reddit.com/r/PersonalFinanc ... p_amounts/

You will see on the 2nd sheet at the bottom called Fixed Data that there are columns with income threshold levels. The document hasn't been updated since 2019 so these amounts need to be manually updated every year. You can find all the threshold amounts on the CRA RDSP InfoBulletins

Note that this link is for view only (it is my template), so you will not be able to modify it directly. But you should be able to either download an equivalent or make a copy to your own googledocs account.

You need to fill in the white section properly, including all the years eligible, since eligibility is a big deal in RDSP stuff. If beneficiary was below 18 and eligible, the parents revenue is part of the bond/grant calculations as well so that may be needed.

To use the google sheet:

set your birth year top left, row 4

set NO in column D ("Eligible") for each year from birth until the year of column A for which your son (benificiary) became eligible for the DTC

set YES in column D for the year your son became eligible and subsequent

Generally speaking:

primary goal is to reach 70k in column AM (the total bond limit per year),

secondary goal that the sheet does include is to become NON-PGAP in column AS. NON-PGAP is the net calculation of (Contributions - (Bonds + Grants)). Note that this can be done by adding late contributions in column G, including rollovers from RESP and RRSPs up to certain amounts.

It can be a bit confusing but it is extremely helpful!

Last edited by islander59 on Feb 6th, 2021 12:08 am, edited 2 times in total.

+3

Feb 1st, 2021 2:38 pm

islander59 [OP]: Sr. Member; Dec 5, 2011; 998 posts; 1127 upvotes

Feb 1st, 2021 2:38 pm

hoob wrote: ↑ How about some use cases? WTF is a RDSP and why would I need one or calculate an opportunity of needing one?

I have updated the OP and will continue to do so. But basically an RDSP an account which helps people with disabilities (and their parents) invest for their retirement/future. So if you nor your child aren't persons with disabilities nor have/are eligible for the Disability Tax Credit, then an RDSP isn't for you.

But you can find out the basics by watching this RDSP video from the CRA: https://www.canada.ca/en/employment-soc ... vings.html

+2

Feb 1st, 2021 3:17 pm

cgtlky: Deal Fanatic; Jan 31, 2006; 8362 posts; 2555 upvotes; Toronto

Feb 1st, 2021 3:17 pm

Labrie wrote: ↑ I have an appointment next week to open one of these for my son. The original T2201 was sent to the CRA so I no longer have it but I have a 'Notice of Determination' from the CRA confirming his eligibility for the DTC. Is this sufficient for the bank as proof or do they need something else?

Also with regards to the grants, his disability was backdated to his birth in 2011. My taxable income for that year was in the amount that he would be eligible for 3:1 match by the government. My income now is much higher and only eligible for 1:1 match. It's a bit confusing but from what I read, if I open the RDSP this year and make an additional contribution, will the government match at 3:1 because they use the earlier years income amount first as part of the carry-forward rules?

You don’t need to provide anything, the bank will send your info to CRA, if you are qualify CRA will send back the matching grant and bond.

+1

Feb 1st, 2021 3:47 pm

islander59 [OP]: Sr. Member; Dec 5, 2011; 998 posts; 1127 upvotes

Feb 1st, 2021 3:47 pm

cgtlky wrote: ↑ You don’t need to provide anything, the bank will send your info to CRA, if you are qualify CRA will send back the matching grant and bond.

I think @Labrie was asking about which documents are needed to open an RDSP. As far as I am aware, you can't just walk into a bank and ask to open an RDSP without documentation like a Disability Tax Credit or Confirmation of Eligibility from the CRA.

But your answer is valid for their question about backdated matching grants and bonds. However, the government takes quite a while to send out the notice of how much money you can receive in matching grants and bonds at the end/start of the year. So, I would not advise people to make their first deposit without researching their eligibility for carry-forward amounts.

@Labrie this article really helped me understand how much my brother needed to deposit to maximize his carry-forward grants/bonds.

It is important to remember that carry-forwards can only go back 10 years, regardless if your DTC is backdated more than 10 years. So, getting money into the RDSP asap is best.

If one opens an RDSP in 2021 and has a backdated DTC from at least 2011, they can't go wrong with contributing the following amounts each year to get the maximum carry-forward amounts for persons with low income:

$3,500 in 2021
$4,000 in 2022
$5,000 in 2023
$5,000 in 2024
$4,000 in 2025

In this scenario, the DTC holder would get $65,500 over 5 years not including gains made from investments.

Here is a summary of the total contributions:
Total private contributions $21,500
Total CDSGs $50,500
Total CDSBs $15,000
Total value in RDSP* $87,000

+1

Feb 1st, 2021 4:00 pm

cgtlky: Deal Fanatic; Jan 31, 2006; 8362 posts; 2555 upvotes; Toronto

Feb 1st, 2021 4:00 pm

islander59 wrote: ↑ I think @Labrie was asking about which documents are needed to open an RDSP. As far as I am aware, you can't just walk into a bank and ask to open an RDSP without documentation like a Disability Tax Credit or Confirmation of Eligibility from the CRA.

But your answer is valid for their question about backdated matching grants and bonds. However, the government takes quite a while to send out the notice of how much money you can receive in matching grants and bonds at the end/start of the year. So, I would not advise people to make their first deposit without researching their eligibility for carry-forward amounts.

@Labrie this article really helped me understand how much my brother needed to deposit to maximize his carry-forward grants/bonds.

It is important to remember that carry-forwards can only go back 10 years, regardless if your DTC is backdated more than 10 years. So, getting money into the RDSP asap is best.

If one opens an RDSP in 2021 and has a backdated DTC from at least 2011, they can't go wrong with contributing the following amounts each year to get the maximum carry-forward amounts for persons with low income:

$3,500 in 2021

$4,000 in 2022

$5,000 in 2023

$5,000 in 2024

$4,000 in 2025

In this scenario, the DTC holder would get $65,500 over 5 years not including gains made from investments.

Here is a summary of the total contributions:
Total private contributions $21,500
Total CDSGs $50,500
Total CDSBs $15,000
Total value in RDSP* $87,000

I have DTC and RDSP. I open an account with MacKenzie Invesments. I did not provide anything aside my personal information and SIN#. From your SIN# CRA can determine if yoy are eligible or not, the bank does not care if you are qualify or not.

Feb 1st, 2021 5:01 pm

islander59 [OP]: Sr. Member; Dec 5, 2011; 998 posts; 1127 upvotes

Feb 1st, 2021 5:01 pm

cgtlky wrote: ↑ I have DTC and RDSP. I open an account with MacKenzie Invesments. I did not provide anything aside my personal information and SIN#. From your SIN# CRA can determine if yoy are eligible or not, the bank does not care if you are qualify or not.

I guess YMMV as with a lot of things with RDSPs. I suspect TD is a little more... je ne sais quoi. I guess they don't want ill-informed people walking in to open an RDSP without a DTC. You would be surprised how many people think they can open one up just like an RRSP. Many people don't realize that getting the DTC is a requirement. Honestly, I have only my brother's experience and several other data points that suggest some banks, and even some reps within banks are more stringent than others. But yes, I would agree that if you do have a DTC, you could just provide your SIN and ID to open one up as you said.

+1

Feb 2nd, 2021 1:14 am

aaron158: Deal Addict; Nov 25, 2004; 4385 posts; 3251 upvotes; London

Feb 2nd, 2021 1:14 am

islander59 wrote: ↑ I guess YMMV as with a lot of things with RDSPs. I suspect TD is a little more... je ne sais quoi. I guess they don't want ill-informed people walking in to open an RDSP without a DTC. You would be surprised how many people think they can open one up just like an RRSP. Many people don't realize that getting the DTC is a requirement. Honestly, I have only my brother's experience and several other data points that suggest some banks, and even some reps within banks are more stringent than others. But yes, I would agree that if you do have a DTC, you could just provide your SIN and ID to open one up as you said.

i opened mine without the letter that i was approved. 2 days after it showed approved on the cra site i went in to td just had to show her photo id and give my sin number.

2 things i haven't been able to get a straight answer on for the bond i got 10 years worth of back pay so on dec 1st i got 10000 so now the max u can get in bonds is $20000? so i assume now on Dec 1st of each year i will get the next 1000? until it maxes out the 20000? or when do the bond payouts happen each year.

also for the grant money like when does the 3:1 reset for each year does it reset on jan 1st or does it reset based on when u opened the account?

also i noticed on dec 16 td paid out 11 cent in interest but no interest for jan so like is interest only paid out yearly and i just happen to catch the payout because i opened it before the end of the year?

Feb 4th, 2021 8:04 pm

islander59 [OP]: Sr. Member; Dec 5, 2011; 998 posts; 1127 upvotes

Feb 4th, 2021 8:04 pm

aaron158 wrote: ↑ 2 things i haven't been able to get a straight answer on for the bond i got 10 years worth of back pay so on dec 1st i got 10000 so now the max u can get in bonds is $20000? so i assume now on Dec 1st of each year i will get the next 1000? until it maxes out the 20000? or when do the bond payouts happen each year.

Yes, you get the 10 years of back dated bonds and grants and then you continue to receive grants and bonds every year based on your income from the prior 2 years. So, you will get a lump sum of bonds until you are caught up, and then you will get a bond each year until you max out at $20k.

Here is an example I made using the calculator

You can see in the actual year (2014) in Column A you would NOT receive and bonds (see highlighted 0 in Column L) because your reference year is from 2012 (see highlighted year in Column C)

If you made $41,000 in 2013, you would receive only $198 (Column C, row 14) in bonds in 2015 (Column A, row 14) because most of you income is above the threshold- $43,953 for that year (see Column K). So you are only getting bonds on the amount of money you made between $41,000 and $43,953 = $198

also for the grant money like when does the 3:1 reset for each year does it reset on jan 1st or does it reset based on when u opened the account?

Grants - the amount you get is based on you net income just like the bonds. But you only get it after you make a contribution. Once it's registered it can take up to a month to get your matching grants.

Here is a screenshot of the grants in my previous example

300% Matching - you would not be eligible for any 100% grants (column N) because your 2012 income of $98,000 is above the grant threshold. HOWEVER, you would receive $9,000 (column P) of your catch up grants.

200% Matching - you would not be eligible for any 200% matching grants, but you would receive $1,500 of the 200% matching because these are catch up grants.

100% Matching - you are actually eligible for $1000 matching grant (column AD, AE, AF) because you made a contribution but since the max payout of grants in one year is $10,500 you won't be receiving it this year. ($9,000 + $1,500 = $10,500 But don't worry, that $1000 matching grant will be carried forward for the next 10 years if you contribute to your RDSP.

also i noticed on dec 16 td paid out 11 cent in interest but no interest for jan so like is interest only paid out yearly and i just happen to catch the payout because i opened it before the end of the year?

I honestly don't know how the interest is calculated. My brother got a few cents also. It is pretty meaningless and honestly I didn't think TD Direct Investing gave interest on their RDSP account.

I suggest you check out the RDSP GRANTS & BONDS CALCULATOR[/b] and input your net income for the past 10 years.

How do I use the RDSP GRANTS & BONDS CALCULATOR?

Instructions

1 - set your birth year top left, row 4
2 - set NO in column D ("Eligible") for each year from birth until the year of column A for which your son (beneficiary) became eligible for the DTC
3 - set YES in column D for the year your son became eligible and subsequent
4 - input the beneficiary's or parent's net income from your Notice Of Assessment
5 - enter the $ amount you will/have contributed to the RDSP

You will see on the 2nd sheet at the bottom called Fixed Data that there are columns with income threshold levels. The document is current to date, but you will need edit these amounts manually when the CRA updates every year. You can find all the threshold amounts on the CRA RDSP InfoBulletins

Generally speaking:

primary goal is to reach 70k in column AM (total lifetime grant limit),
secondary goal that the sheet does include is to become NON-PGAP in column AS. NON-PGAP is the net calculation of (Contributions - (Bonds + Grants)). Note that this can be done by adding late contributions in column G, including rollovers from RESP and RRSPs up to certain amounts.

Images

Last edited by islander59 on Aug 28th, 2021 11:25 am, edited 4 times in total.

+1

Feb 4th, 2021 11:35 pm

aaron158: Deal Addict; Nov 25, 2004; 4385 posts; 3251 upvotes; London

Feb 4th, 2021 11:35 pm

ok but my question is when does the 3:1 and 2:1 top ups reset each year. is it jan 1st or based on when u opened the account

same with the bond does the next 1000 come though on the same day as the back payment or is there set day each year afterwards that those bonds come in.

Feb 4th, 2021 11:46 pm

islander59 [OP]: Sr. Member; Dec 5, 2011; 998 posts; 1127 upvotes

Feb 4th, 2021 11:46 pm

aaron158 wrote: ↑ ok but my question is when does the 3:1 and 2:1 top ups reset each year. is it jan 1st or based on when u opened the account

same with the bond does the next 1000 come though on the same day as the back payment or is there set day each year afterwards that those bonds come in.

Bonds reset every Jan 1st. Not sure when they arrive perhaps a few weeks to a month.

In my reply I said:

Grants - the amount you get is based on you net income just like the bonds. But you only get it after you make a contribution. Once it's registered it can take up to a month to get your matching grants.

Feb 5th, 2021 12:00 am

aaron158: Deal Addict; Nov 25, 2004; 4385 posts; 3251 upvotes; London

Feb 5th, 2021 12:00 am

islander59 wrote: ↑ Bonds reset every Jan 1st. Not sure when they arrive perhaps a few weeks to a month.

In my reply I said:

for the grants though when do they return to 3:1 each year. like u get 3:1 for 500 then 2:1 for 1000 so say u have max that out by april does it go back to 3:1 in jan of the next year? even the bank lady didn't seem to know

Feb 5th, 2021 12:24 am

islander59 [OP]: Sr. Member; Dec 5, 2011; 998 posts; 1127 upvotes

Feb 5th, 2021 12:24 am

aaron158 wrote: ↑ for the grants though when do they return to 3:1 each year. like u get 3:1 for 500 then 2:1 for 1000 so say u have max that out by april does it go back to 3:1 in jan of the next year? even the bank lady didn't seem to know

Yes, it always resets in Jan 1st. The matching ratio is based on your net income from 2 years prior. That income matching level is what you get for the entire year. So, if you contribute enough to max out all matching grants, you will get no extra grants/bonds until the next Jan 1st.

+1

Feb 5th, 2021 3:49 pm

Jedi14: Member; Aug 23, 2014; 461 posts; 239 upvotes; Mississauga, ON

Feb 5th, 2021 3:49 pm

aaron158 wrote: ↑ for the grants though when do they return to 3:1 each year. like u get 3:1 for 500 then 2:1 for 1000 so say u have max that out by april does it go back to 3:1 in jan of the next year? even the bank lady didn't seem to know

My son’s RDSP is with TD. I’ve found few bank employees are knowledgeable with RDSP accounts. A bit understandable, as relatively few people are eligible and can open one. Rdsp.com is a great resource as mentioned upthread.

+2

Feb 5th, 2021 4:40 pm

islander59 [OP]: Sr. Member; Dec 5, 2011; 998 posts; 1127 upvotes

Feb 5th, 2021 4:40 pm

@aaron158 wrote: ↑
for the grants though when do they return to 3:1 each year. like u get 3:1 for 500 then 2:1 for 1000 so say u have max that out by april does it go back to 3:1 in jan of the next year? even the bank lady didn't seem to know

Jedi14 wrote: ↑ My son’s RDSP is with TD. I’ve found few bank employees are knowledgeable with RDSP accounts. A bit understandable, as relatively few people are eligible and can open one. Rdsp.com is a great resource as mentioned upthread.

Ohhhhh now I think I understand. The grants and bonds reset on the calendar year, not the fiscal year! I was wondering why on earth you thought it would restart in April just because you deposited money in Jan/Feb.

EDIT: But just remember that if your net income from 2 years prior is above the top matching threshold, you will only qualify for 100% matching for that year.

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