If you have family members with prolonged impairments, you can take advantage of the registered disability savings plan to secure their future financially. Of course, this service is available to particular individuals with an approved disability tax credit. Instead of wracking your mind looking for things you should do, here is a foolproof method to help you complete the process much faster.
The registered Disability Savings Plan Explained
Parents and family members of individuals eligible for the disability tax credit can make plans toward saving for their physically or mentally impaired loved ones. This program allows disabled persons to attain long-term financial security through monthly savings made into their accounts.
This plan gives you access to un-tax-deductible savings opportunities, and beneficiaries can contribute to it until the last month of their 59th birthday.
Why And When You Should Apply
This program is reserved for individuals with physical and mental impairments. Signing up for it allows you to save towards your future without incurring income tax on the profits. It’s also an inclusive way of letting other people contribute to your kitty with your written consent.
However, it isn’t until a medical practitioner ascertains your condition to be true that you should apply for this savings plan. You should also apply for this plan if your disability credit tax is approved.
Where You Apply
Approved financial organizations in Canada grant disability savings plans. You should book an appointment with an institution of your choice to begin the application process. Thankfully, you do not have to have an account in any of these institutions to benefit from their RDSP. If you aren’t sure about the eligible banking institutions that qualify to help you with RDSP, here is the complete list to help you get started.
Requirements And Documentation Needed
Before sending your application for the registered disability savings plan, you must check all necessary boxes to be successful. You must:
- Be eligible for the disability tax credit.
- Have a functional social security number.
- Live in Canada when signing up for the plan.
- Not be above 59 years at the time of signing up for the service.
How Much Would You Get?
When you successfully apply for the RDSP, you are eligible to receive at least $1000 in grants annually. However, you must deposit money into your account to benefit from these government-funded grants. You stand a chance of receiving up to $3 for every $1 you save.
This, however, depends on your family’s financial ability, which is reflected by your total income. So, depending on the gross income, you may receive up to $90,000 in grants and bonds.
What Happens If You Lose Disability Tax Credit Approval?
Unfortunately, losing your disability tax credit is possible when you take the DTC test. If you lose the approval, no one can contribute to your RDSP account, even though it will remain open. You also lose all grants and bond benefits. And while you can withdraw funds from the account, the withdrawals will be subject to repayment depending on how old you are.
Validity And Processing Time
The RDSP is valid for as long as you retain your disability tax credit approval and are below 59 years. Once you hit this threshold, you can’t make any contributions once the beneficiary exceeds the specified age. How much it takes to process this request depends on a financial institution. You should consult your handler for intel on the processing time when you apply for the registered disability savings plan.