RDSP: how the Registered Disability Savings Plan works

What an RDSP is

An RDSP helps a person approved for the disability tax credit (DTC) save for long-term financial security. Contributions aren’t tax deductible, but the money grows tax-sheltered, and the government adds grants and bonds that can be several times what the family puts in.

To be the beneficiary of an RDSP, the CRA says the person must:

• Be approved for the DTC, which requires a medical practitioner to certify a severe and prolonged impairment on Form T2201 and the CRA to approve it
• Have a valid social insurance number
• Be a resident of Canada when the plan is opened
• Be under 60: a plan can be opened until the end of the year they turn 59

Each beneficiary can have only one RDSP at a time. There’s no annual contribution limit, but the lifetime limit is $200,000, and contributions are allowed until the end of the year the beneficiary turns 59. Anyone can contribute with the plan holder’s written permission, and contributions can’t be refunded to the people who made them.

The grant: up to $3,500 a year

The Canada Disability Savings Grant matches what goes into the plan. How generous the match is depends on family income, using the tax return from 2 years earlier, so 2026 grants use 2024 income.

ESDC’s own example: with a family income of $60,000, a $1,200 contribution earns $2,900, made up of $1,500 on the first $500 and $1,400 on the next $700. Grants are paid on contributions until December 31 of the year the beneficiary turns 49, up to $70,000 over a lifetime.

The bond: up to $1,000 a year

The Canada Disability Savings Bond is paid to lower-income beneficiaries whether or not anyone contributes. For 2026:

• Family income of $38,237 or less: the full $1,000
• Between $38,237 and $58,523: part of the $1,000, shrinking as income rises
• $58,523 or more: no bond

The bond is paid until the year the beneficiary turns 49, to a lifetime maximum of $20,000. Until the end of the year a beneficiary turns 18, family income means their parents’ income. From the year they turn 19, it’s their own income plus a spouse’s, which is why ESDC asks beneficiaries to start filing their own tax returns from the year they turn 17.

Catching up on past years

Opened your RDSP late? You can carry forward up to 10 years of unused grant and bond entitlements for years you were DTC-approved and a Canadian resident. With carry-forward, a plan can receive up to $10,500 in grants and $11,000 in bonds in a single year.

Bond carry-forward arrives automatically once you open the plan and apply. Grant carry-forward needs contributions, so catching up can take a few years. Every February, plan holders get a Statement of Entitlement showing how much grant is available and how much to contribute to get it.

How to open an RDSP

Withdrawals and the repayment rules

Grants and bonds are meant for long-term savings, so taking money out early has a cost. To cover it, issuers hold back an amount equal to the grants and bonds paid in the previous 10 years.

• Withdrawals: for every $1 taken out, $3 of grants and bonds paid in the past 10 years must be repaid, up to the held-back amount.
• Closing the plan, or the beneficiary’s death: all grants and bonds from the past 10 years must be repaid. After a death, the plan must be closed and paid to the estate by December 31 of the following year.
• Losing DTC approval: since 2021 the plan can stay open with no new contributions, grants or bonds, and nothing has to be repaid just because approval ended. Withdrawals before age 60 still trigger repayment.

When money comes out, the contributions part isn’t taxed, but grants, bonds, investment growth and rollover amounts are taxable income for the beneficiary.

Rolling other savings into an RDSP

Two kinds of savings can move in without counting as new income. A deceased parent’s or grandparent’s RRSP, RRIF and certain pension amounts can roll over to the RDSP of a child or grandchild who depended on them financially because of an impairment. And RESP investment earnings can roll over to the same beneficiary’s RDSP if the plan rules are met. Rollovers don’t earn the grant and count toward the $200,000 lifetime limit. Our RESP guide covers that side.