How Does The RDSP Work?

The Registered Disability Savings Plan (RDSP) is a federal government program that encourages people with disabilities and those who care for them to save and become more financially secure.  The federal government encourages saving with generous contributions to  RDSPs, even when people don’t contribute themselves.  The RDSP can be invested and grows on a tax deferred basis.  When money comes out, part of it (the government contributions and investment income) is considered taxable income to the beneficiary.

Provincial governments also encourage the use of RDSPs.  They have made RDSPs exempt under provincial disability benefit programs.  This means people can save for their future financial security without jeopardizing their income benefits today.  Most provinces have completely exempted RDSP income (see How are government benefits affected?). This means that people can withdraw money from their RDSPs without jeopardizing their income benefits in the future.)

Altogether, this makes the RDSP a very powerful way for people with disabilities to save for their future financial security.


Go to: How does the federal government contribute?