Human Resources and Skills Development Canada
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Human Resources and Skills Development Canada

www.hrsdc.gc.ca

Withdraw Savings from an RDSP

The Registered Disability Savings Plan (RDSP) is a long-term savings plan. The grants and bonds are intended to encourage savings and must remain in an RDSP for at least 10 years.

Whenever money is withdrawn from an RDSP, all grants and bonds paid into the RDSP during the 10 years before the withdrawal must be repaid to the Government.

For information on withdrawing money from an RDSP, see Payments and Taxation on the CRA website or call 1-800-959-8281 (TTY users call 1-800-665-0354).

Beneficiaries with shortened life expectancies

The Government of Canada’s Budget 2011 announced a new provision that offers more flexibility to people with shortened life expectancies (a life expectancy of five years or less) when making withdrawals from their Registered Disability Savings Plans (RDSPs). As the RDSP is a long-term savings plan, grants and bonds must remain in an RDSP for at least 10 years. Whenever money is withdrawn, all grants and bonds that were paid into the RDSP during the preceding 10 years must be repaid to the Government.

Under the new rules, beneficiaries with a life expectancy of five years or less will be able to withdraw up to $10,000 per year in taxable savings, subject to certain conditions. This amount includes grants, bonds, and earnings. In addition to this, beneficiaries can withdraw a pro-rated amount of their plan contributions.

Repayment of any remaining grants and bonds that were paid into the plan within the preceding 10 years is not required until the death of the beneficiary.

To take advantage of this measure, the plan holder(s) must submit a request to the financial institution, along with a medical attestation. The financial institution will then notify Human Resources and Skills Development Canada of the change to your plan.

For more information on this provision, please speak with a representative at your financial institution or visit the Canada Revenue Agency website or the Department of Finance website.

Closure of an RDSP

Grants and bonds that have been in the RDSP for less than 10 years must be repaid to the Government if:

  • the plan is closed, or
  • the beneficiary loses eligibility for the Disability Tax Credit (Disability Amount), or
  • the beneficiary passes away.

All other money in the RDSP, including private contributions, investment income earned, and grants and bonds that have been in the RDSP for more than 10 years, is paid to the beneficiary or the beneficiary’s estate.

Long-term disability savings

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Date Modified:
2011-11-07