I’m a father of child who has autism, and my wife and I have often wondered about his future. How will he be as an adult? What will he do? Where will he live? Will he be able to support himself?
I’m sure these questions are asked by all parents, but particularly parents of children with special needs.
Late last year, I found information on what appears to be a little known federal government-sponsored plan that has eased some of our concerns for our son’s financial well-being. The plan is called the Registered Disability Savings Plan (RDSP).
What is it?
The RDSP is a matched savings plan for people with disabilities. For every $1 put in an RDSP account, the federal government will contribute up to $3, depending on your family income. You read that right… $3 for every dollar you contribute!
As an example, let’s say you were to open an RDSP for your child.
- Your contribution: $1,000
- Gov’t contribution: $3,000
The government will contribute a maximum of $3,500 in matching grants every year. In addition, for people with lower incomes, the federal government will contribute up to $1,000 more each year for 20 years.
You can keep contributing to the RDSP until the person with the disability turns 59.
What happens to the money in the account?
The way the financial institutions have set these up, the RDSP is an investment account. So, it’s up to you to decide how to invest the money (both yours and the government’s contributions). You can choose low risk investments (cash, GICs, etc.) or something with a higher chance of growth (mutual funds, stocks, etc.).
Who can qualify for an RDSP?
To qualify, you must:
- be eligible for the Disability Tax Credit
- have a valid social insurance number
- be a Canadian resident
What’s the catch?
The only ‘catch’ that I see is that the money has to stay in the account for 10 years; otherwise the government will take back their contribution.
You can find out a lot more about the RDSP on these useful websites:
Have you opened an RDSP for yourself or your child? Leave a comment below and let me know what you think!
Great article Mike! I will definitely tell Tracy about this for William!!
Great piece. And the only “catch” you identified has now actually been improved:
Instead of all government contributions from the last 10 years having to be returned if a withdrawal takes place, as of this year for each $1 taken, only $3 of any government contributions paid into the plan would need to be repaid. But remember, all grants and bonds older than 10 years are always 100% yours.
Thanks for the comment Joel; that’s good to know.