“We as a family had quite often received information about RDSPs from different organizations, but we always put it on the back burner,” says Gusikoski. “It was like, ‘Yeah, we’ll get to that.’”
Her family isn’t alone. More than 1.45 million Canadians are eligible to open an RDSP, but only about 36% of them had one as of the end of 2022, according to the most recent data from Statistics Canada.
A mere 17% of Canadians surveyed know about RDSPs, and many don’t understand how these registered accounts work, according to a recent study commissioned by Concentra Trust, an Equitable Bank company that provides services to a majority of Canada’s credit unions. Gusikoski, who is the director of registered plans at Concentra Trust, recounts how she didn’t realize the RDSP would be a good fit for Cody until she herself began exploring offering the RDSP as part of the company’s work with credit unions. Once she did, the benefits were immediately apparent.
“That was actually the perfect opportunity for me to go through the process from beginning to end,” says Gusikoski. “I quickly realized that the lack of awareness around the RDSP—including its government grants, its growth potential and how it works—has led to a huge missed opportunity for Canadians with disabilities.”
What is an RDSP?
Introduced by the Canadian government in 2008, the registered disability savings plan is a registered account designed to help eligible people with a disability to save for the long term. RDSPs are offered by a variety of financial institutions, including credit unions.
To become an RDSP beneficiary, an individual must be approved to receive the federal disability tax credit (DTC), have a social insurance number (SIN), be a Canadian resident, and be under age 60. A beneficiary can only have one RDSP.
Like other registered accounts, an RDSP offers tax advantages: any growth in the account is not taxed until the funds are withdrawn. Grants, bonds and interest are taxed in the hands of the beneficiary, and personal contributions are not taxed.
An RDSP consists of three segments: contributions, grants and bonds. Contributions are what you or your family make to the RDSP. Here’s how the grants and bonds work: