RDSP: How to Open One, Maximize Free Government Money, and Avoid Common Mistakes
The RDSP gives up to $3,500/year in free government grants and $1,000 in bonds — even with $0 contributions. Most eligible Canadians don't have one. Here's how to fix that.
The Registered Disability Savings Plan is the most underused disability benefit in Canada. It provides up to $3,500 per year in free government matching grants and $1,000 in bonds — even if you contribute nothing. Yet only about 35% of eligible Canadians have opened one.
What Is the RDSP?
The RDSP is a long-term savings plan designed to help people with disabilities save for the future. The government provides two types of contributions:
- Canada Disability Savings Grant (CDSG): The government matches your contributions up to $3,500/year, depending on income
- Canada Disability Savings Bond (CDSB): Up to $1,000/year for low-income individuals, with no personal contribution required
Over a lifetime, the government will contribute up to $90,000 in grants and bonds.
Who Can Open an RDSP?
To be eligible, the person with a disability (the beneficiary) must:
- Have an approved Disability Tax Credit (DTC)
- Be under age 60
- Be a Canadian resident
- Have a valid Social Insurance Number (SIN)
The RDSP can be opened by the beneficiary themselves, a parent (for beneficiaries under 18), or a legal representative.
How to Open an RDSP
Step 1: Ensure the DTC is approved. This is the only eligibility requirement.
Step 2: Contact a financial institution that offers RDSPs. Not all banks offer them. Major institutions that do include:
- BMO
- CIBC
- National Bank
- RBC
- Scotiabank
- TD
Step 3: Bring your SIN, DTC approval letter (or Notice of Assessment showing DTC), and government-issued ID.
Step 4: Choose your investments. RDSPs can hold GICs, mutual funds, bonds, and other eligible investments. If you're unsure, start with a simple GIC or balanced mutual fund.
Maximizing Free Government Money
The Grant (CDSG):
The matching rate depends on the beneficiary's family income (or their own income if over 18):
- Income under approximately $39,826: Government matches $3 for every $1, up to $500 contributed (= $1,500 grant). Plus $2 for every $1 on the next $1,000 (= $2,000 grant). Total: $3,500 grant on $1,500 contributed.
- Income between $39,826 and $106,717: Government matches $1 for every $1, up to $1,000 contributed. Total: $1,000 grant.
- Income over $106,717: Same $1:$1 matching up to $1,000.
The Bond (CDSB):
- Income under approximately $39,826: $1,000/year with no contribution required
- Income between $39,826 and $53,359: Partial bond amount
- Income over $53,359: No bond
Key rule: You can carry forward unused grant and bond entitlements for up to 10 years. This means if you open an RDSP today, you could claim retroactive grants and bonds going back to 2008 (when the program started) or the year the beneficiary turned 18, whichever is later.
The $0 Contribution Strategy
If the beneficiary has low income (under approximately $39,826), they receive the full $1,000 bond automatically — with zero personal contributions. Over 10 years, that's $10,000 in free government money just for having the account open.
Even with $0 contributions, the government bonds accumulate. This is why every DTC-eligible Canadian should open an RDSP immediately, regardless of whether they can afford to contribute.
Common Mistakes to Avoid
1. Waiting too long to open one
Grant and bond entitlements accumulate from age 18 but can only be carried forward 10 years. Every year you wait, you lose one year of entitlements permanently.
2. Not claiming carry-forward amounts
When you open an RDSP, the maximum grant in any single year is $10,500 (to catch up on missed years). Make sure your financial institution applies for all available carry-forward grants and bonds.
3. Withdrawing too early
The 10-year rule: Any government grants and bonds received in the last 10 years must be repaid if you make a withdrawal. This means the RDSP works best as a long-term savings vehicle. Plan to keep funds in for at least 10 years.
4. Confusing RDSP with RRSP or TFSA
- RDSP contributions are not tax-deductible (unlike RRSPs)
- Withdrawals are partially taxable (the grant/bond portion is taxed as income)
- RDSP does not affect eligibility for most provincial disability benefits (unlike RRSPs and TFSAs which may count as assets)
5. Not updating the DTC
If the DTC expires and is not renewed, the RDSP must be closed within a certain period, and the government claws back grants and bonds. Keep your DTC current.
RDSP and Provincial Benefits
One of the best features of the RDSP is that most provinces exempt it from asset tests for provincial disability benefits like ODSP (Ontario), AISH (Alberta), and PWD (BC). This means you can save for the future without losing your monthly supports.
What to Do Right Now
- Check if you have an approved DTC — if not, apply immediately
- Open an RDSP at any major bank, even if you can't contribute anything
- Ask the bank to apply for all carry-forward grants and bonds
- Set up automatic contributions if possible — even $25/month helps maximize grants
- Don't withdraw for at least 10 years to keep all government contributions