Opening an RDSP account

Only one RDSP can be established per beneficiary. The plan must be established by the disabled individual, unless he or she is not legally competent to sign a contract (e.g. a minor or mentally impaired). When the beneficiary is not legally able to sign a contract, the person(s) legally authorized to act on behalf of the disabled individual can establish the plan. The person who establishes the plan is referred to under the Income Tax Act (Canada) as the “holder” and has principal decision-making ability over the plan (e.g. directing investments and the amount and timing of withdrawals). The Social Insurance Number (SIN) of the disabled individual is also required. There can be more than one holder, but only one beneficiary per plan. An RDSP can be transferred from one financial institution to another as the holder and/or beneficiary wish.

To open an RDSP:

1. Establish if you are eligible for the disability tax credit.
   
   If so,
   
   
2. Download and complete the Mackenzie RDSP application.
   Your financial advisor can help you with this.

Contributions

Once an RDSP is established, contributions can be made by anyone, with the holder's written consent or by giving the money to the holder to deposit. Written consent is required to ensure the holder of the plan is able to schedule contributions to maximize government grants (described later). The maximum lifetime contribution is $200,000 per beneficiary. There is no annual contribution limit - $200,000 can be contributed in any one year, if so desired.

Contributions are not tax-deductible; however, the earnings on contributions grow tax free while held in the plan. Contributions must cease by the end of the year in which the beneficiary reaches age 59.

Once an RDSP is set up, there are four ways to put money in:

1. Contributions by the account holder
   
   
2. Contributions by people the account holder has authorized
   
   
3. Federal grants and bonds
   
   
4. Transfers from a qualified RSP or RRIF