So now that the RDSP is finally a viable option for the disabled community in Nova Scotia, I thought I would pass on a few more interesting tidbits.
- We already know that the Bank of Montreal and the Royal Bank are on board. It is hoped that CIBC will be next, hopefully by the end of February.
- In regard to the necessity of the beneficiary of a RDSP being approved for the Disability Tax Credit, remember that you can set up the RDSP prior to being approved for the Disability Tax Credit, provided that you become approved for the DTC in the same year that you set up the RDSP.
- Lest we forget yearly Income Tax returns must be filed in order to leverage the government Bond and Grant. If the beneficiary is 19 years of age or over, it is their Income Tax returns that must be filed. If they are under the age of 19, it is the family's Income Tax Returns which will decide how money monies the federal government will pay the RDSP.
But that doesn't meant that you shouldn't go ahead and set up your RDSP now. Go ahead and then once your Income Tax return is filed sometime in the next few months, that will leverage any government monies you are entitled to. Just remember, you must continue to file your Income Tax returns in order to be eligible for the Grant and Bond on a yearly basis.
- It's also important to realize (and I must confess that I hadn't) that you can go ahead and open a RDSP without putting any money in. That's right, a zero dollar account. Which (depending on the beneficiary's or their family's income) could still leverage the annual government bond of $1,000. You read that right, open a RDSP without putting a penny in and (depending on your income) the government may still give you free money every year.
- One very important point - if you open a RDSP on behalf of your disabled child who is under the age of majority, you, as the parent can continue as holder of the plan after the beneficiary reaches the age of majority. At which time, the beneficiary may be added to the RDSP as a joint holder if they so wish.
As opposed to the situation when a RDSP is opened for a disabled adult, in which case, the beneficiary is the only one qualified to be a holder of the plan. Which gets you into issues of the competency of the beneficiary.
Because remember that as a parent of disabled adult, you have absolutely no legal say or input into that adult's life. Unless of course you have guardianship. And although you may still want to seriously consider guardianship for other purposes, at least if the RDSP is opened while the beneficiary is still a minor child, you won't have that to worry about.
So if you've been thinking of opening a RDSP for your minor child, you might want to seriously consider doing it now and not waiting until they become an adult. Not only will waiting cost you years of potential government money but you might well find yourself in a situation where it is very difficult to be able to even open the RDSP.
Because if your adult child is not considered contractually competent to open a RDSP, then you, as as their parent, may only open a RDSP on their behalf if the plan is opened as a result of a transfer from another RDSP under which the disabled adult was named as a holder; or if you, as the parent, are legally authorized to act on behalf of the beneficiary (meaning you have guardianship).
- On a closing note, I find that a lot of people tend to be confused about some of the details of how a RDSP works, in particular the Canada Disabilty Savings Grant and the Canada Disabiltiy Savings Bond. There also seems to be some confusion around the fact that when any money is withdrawn from the RDSP, any government grants and bonds received in the previous ten years must be repaid to the government.
Oh, the things I do for you. This page gives a fairly clear explanation of the Canada Disability Savings Grant and how much of it your RDSP will be eligible for. Likewise, this page for the Canada Disability Bond. And this page should cover off any questions you may have concerning the extension of the deadline for 2008. Any additional outstanding questions, hopefully, will be answered here.
But if you read all that and find that you're still stuck, drop a comment or post me an email (just click on the See My Complete Profile link on the top of the sidebar to find the email address) and I will see what I can do.
Update: Say it and it shall be so!
CIBC has signed up as the third financial institution to be offering the RDSP to Canadians.