RDSPs: Catch-Up Grants are Available

A good argument can be made for a Registered Disability Savings Plan (RDSP) deposit before year end to maximize government support for the disabled in the family.

When an RDSP is opened, Canada Disability Savings Grant (CDSG) and Bond (CDSB) entitlements will be calculated for the 10 years prior to the opening date (but after 2008) based on the beneficiary’s family income in those years.

The rules are a bit complicated: CDSB entitlements from the catch-up period will be paid into the plan in the year the plan is opened. 

But the CDSG rate earned by those contributions will be paid in the year the account is opened and will be calculated as if the contributions were made in the year that the entitlements were earned. Where the entitlement will be paid at different rates, the grants will be calculated at the highest rate first.

The annual maximums for grants and bonds on unused entitlements are:

• $10,500 for grants; and
• $11,000 for bonds.

See this issue's Advisor Think Tank for more news on recent changes to be discussed with clients regarding year end RDSP planning and an example.