A look at financial security for people with disabilities

An ongoing and emotional concern

If we mention “financial security for people with disabilities,” what comes to mind? For many of you who are directly involved, you may think of … a sea of emotions.

It is undoubtedly a delicate subject. What is the best way to prepare for the financial future of your child (and more generally of the person you care for) with a disability? How do you ensure your child’s future when you won’t always be around? What are the financial resources your child could benefit from, how do you find them and how do you access them? And how do you do all this, when you have to deal with financial issues, administrative procedures, endless appointments, fatigue and anxiety?

Angela Iermieri has been a financial planner with Desjardins for 22 years. She explains in simple terms how to ensure the long-term financial security of your child with a disability with a Registered Disability Savings Plan (RDSP).

Specifics of the RDSP

Angela Iermieri advises anyone who qualifies for the Disability Tax Credit (DTC) to consider an RDSP.

A Registered Disability Savings Plan (RDSP) is a savings plan designed specifically to help parents and others save for the long-term financial security of a person eligible for the Disability Tax Credit (DTC):

• There is no annual limit on the amount that can be contributed to a beneficiary’s RDSP in a given year. However, the overall lifetime limit for a beneficiary is $200,000. Contributions are permitted until the end of the year in which the beneficiary turns 59 years of age;
• The RDSP is eligible for two government grants: the Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB). Both grants are paid out until the recipient's 49th birthday.

Process

To be eligible, an individual must meet the following criteria:

• Is eligible for the disability tax credit (DTC);
  
• Has a valid social insurance number (SIN);
  
• Is a resident in Canada when the plan is entered into;
  
• Is under the age of 60 (a plan can be opened for an individual until the end of the year in which they turn 59).

To open an RDSP:

• The RDSP can be opened by the parents or legal guardian of a child with a disability, if the child is a minor;
  
• It can be opened by the beneficiary if they are of legal age and able to enter into a contract;
  
• All the steps to open an RDSP.

Mini glossary

• Rollover: means transfer. Transfers from registered accounts (e.g., RRSPs and RESPs) to the RDSP are permitted under certain conditions;
  
• Beneficiary: the person who benefits from the use of RDSP funds;
  
• Account holder: the person who administers the account.