The Registered Disability Savings Plan (RDSP) is a tax-deferred savings plan for Canadians who qualify for the Disability Tax Credit. The federal government adds matching grants (Canada Disability Savings Grant) of up to $3,500 per year ($70,000 lifetime) and bonds (Canada Disability Savings Bond) of up to $1,000 per year ($20,000 lifetime) for low-income beneficiaries. Investment growth inside the RDSP is tax-deferred, and withdrawals are partly taxable based on the contributions/grant/bond mix. RDSPs are one of the most generous federal savings programs available, particularly for families with eligible children.
Who can have an RDSP
| Requirement | Detail |
|---|---|
| DTC eligibility | Beneficiary must qualify for the Disability Tax Credit |
| Age | Up to and including the year the beneficiary turns 59 |
| Residency | Beneficiary must be a Canadian resident with a SIN at the time the plan is opened and contributions are made |
| Holder | The beneficiary if they are at least 18 and legally competent; otherwise a parent, legal guardian, or qualifying family member |
Once an RDSP is open, the beneficiary can be a non-resident, but no further contributions or grant/bond payments are made while non-resident.
Contribution rules
| Rule | Detail |
|---|---|
| Annual contribution limit | None. There is no annual cap. |
| Lifetime contribution limit | $200,000 per beneficiary |
| Source of contributions | Anyone authorized by the holder can contribute |
| Tax deduction | Contributions are not tax-deductible (unlike RRSP) |
| Tax on growth | Tax-deferred while inside the plan |
| Final age for contributions | December 31 of the year the beneficiary turns 59 |
Canada Disability Savings Grant (CDSG)
The federal government matches contributions based on the beneficiary’s family income. Matching rates:
| Family income | Match rate | Match cap per year |
|---|---|---|
| Up to ~$111,733 (2026 indexed threshold) | 300% on first $500 of contribution; 200% on next $1,000 | $3,500 per year |
| Above the threshold | 100% on first $1,000 of contribution | $1,000 per year |
Lifetime CDSG limit: $70,000 per beneficiary. Family income below the threshold means $1,500 of contribution attracts $3,500 of grant — a 233 percent return on contributed dollars in the year of contribution. Above the threshold, $1,000 of contribution attracts $1,000 of grant.
Canada Disability Savings Bond (CDSB)
For low-income beneficiaries, the federal government deposits a Canada Disability Savings Bond into the RDSP without any contribution required. Bond amount:
| Family income (2026 indexed) | Bond amount per year |
|---|---|
| Up to ~$36,328 | $1,000 |
| $36,328 to ~$56,026 | Pro-rated downward |
| Above ~$56,026 | $0 |
Lifetime CDSB limit: $20,000 per beneficiary. Bonds are paid until the year the beneficiary turns 49.
Carry-forward of unused grant and bond room
Unused CDSG and CDSB room since 2008 (or since the year of DTC eligibility, if later) is carried forward and can be used until the year the beneficiary turns 49. A family that opens an RDSP late but has had years of DTC eligibility can claim up to 10 years of carry-forward. Single-year deposits are capped at $10,500 of CDSG and $11,000 of CDSB to manage cash flow into the plan.
Withdrawals and the 10-year holdback rule
Money in an RDSP comes out in two flavours:
| Withdrawal type | Rules |
|---|---|
| Lifetime Disability Assistance Payment (LDAP) | Mandatory annual withdrawal starting no later than the year the beneficiary turns 60. Calculated by formula. Designed to last to age 83. |
| Disability Assistance Payment (DAP) | Optional ad-hoc withdrawal. Available at any time but subject to the 10-year holdback rule. |
The 10-year holdback rule: If any DAP is taken, the plan must repay $3 of grant and bond received in the prior 10 years for every $1 withdrawn, up to the total grant and bond received. This rule strongly discourages early withdrawal of plans that received significant federal money. Waiting until 10 calendar years have elapsed since the last grant or bond payment eliminates the holdback.
Tax treatment of withdrawals
Withdrawals are split between taxable and non-taxable portions based on the prorated composition of the plan. The non-taxable portion is the contributions; the taxable portion is grants, bonds, and accumulated investment growth. The taxable portion is included in the beneficiary’s income on the T1 return; T-slips are issued (T4A).
Worked example: low-income family, child age 5
A family with adjusted family net income of $35,000 has a 5-year-old child approved for the DTC.
- Open RDSP. Bond ($1,000) deposits automatically annually.
- Contribute $1,500 per year. Grant matches at 300% on first $500 ($1,500) and 200% on next $1,000 ($2,000), totalling $3,500 grant.
- Annual deposits to plan: $1,500 (family) + $1,000 (bond) + $3,500 (grant) = $6,000.
- By age 49 (44 years of contributions), assuming 6% annual growth: plan balance approximately $1.5 million in nominal dollars, of which about $1.0 million is grants, bonds, and growth (taxable on withdrawal) and $0.5 million is contributions (non-taxable).
- Lifetime federal grant + bond received: $70,000 + $20,000 = $90,000 in government deposits; family deposited $66,000 in contributions. The plan’s value reflects 50+ years of compound growth on $156,000 of total contributions.
Common mistakes
- Waiting too long to open the plan. Each year of delay reduces compound growth and may cost grant/bond room. Open the year DTC is approved.
- Contributing too much in one year. Above the grant-eligible amount produces no match. Spread $1,500/yr to capture maximum grant.
- Withdrawing too early. The 10-year holdback rule can claw back tens of thousands of grant and bond.
- Forgetting to file taxes. CDSG and CDSB are calculated based on family income from the T1 return. No tax filing means no benefit.
- Confusing RDSP with RRSP. RDSP contributions are not tax-deductible; the benefit is the federal match plus tax-deferred growth.
Cross-references
- Who Qualifies for the Disability Tax Credit?
- DTC Retroactive Claims: Recover Up to 10 Years
- Child Disability Benefit and Canada Disability Benefit
- DTC Transfer to a Spouse, Parent, or Family Member
Frequently asked questions
- Who can have an RDSP?
- A Canadian resident under age 60 who qualifies for the Disability Tax Credit. The plan can stay open and grow tax-deferred for life, but no contributions or grant/bond payments are made after the year the beneficiary turns 59 (grants) or 49 (bonds).
- How much is the Canada Disability Savings Grant?
- Up to $3,500 per year for low-to-middle-income families (300% match on the first $500 of contribution and 200% on the next $1,000) with a lifetime cap of $70,000.
- How much is the Canada Disability Savings Bond?
- Up to $1,000 per year for low-income families (no contribution required), with a lifetime cap of $20,000.
- What is the RDSP 10-year holdback rule?
- If any withdrawal is taken from the plan, $3 of grant and bond received in the prior 10 years must be repaid for every $1 withdrawn. Waiting at least 10 years after the last grant or bond payment eliminates the holdback.
- Are RDSP contributions tax-deductible?
- No. Unlike RRSP contributions, RDSP contributions are not deductible. The benefit is the federal match (grants and bonds) plus tax-deferred growth.
- Can I open an RDSP retroactively?
- Yes, until the year the beneficiary turns 59. Unused CDSG and CDSB room from the year of DTC eligibility (or 2008, whichever is later) carries forward and can be claimed up to age 49.
- Are RDSP withdrawals taxable?
- Partly. Withdrawals are split into taxable (grants, bonds, growth) and non-taxable (contributions) portions based on the plan's composition. The taxable portion is included in the beneficiary's income on T1.