InfoCapsule 19: Plan closure

On this page

• List of acronyms
• Preface
• Reason “01” Death of the beneficiary
• Reason “02” Loss of the Disability Tax Credit (DTC)
• Reason “03” Transfer
• Reason “04” Plan de-registered (non-compliant)
• Reason “05” Other

Alternate format

A PDF version of the InfoCapsules for RDSP providers is available on the index page.

Preface

There is no set timeline for how long a Registered Disability Savings Plan (RDSP) can remain open; however, different events or reasons may lead to the closure of an RDSP. Issuers should follow the steps identified below for each closure reason:

Reason "01" Death of the beneficiary

• Issue a disability assistance payment (DAP) to the beneficiary's estate
• Repay any assistance holdback amount (AHA) to the Government of Canada
• Submit a Close contract transaction (102-10) with closure reason "01" to the Canada Disability Savings Program (CDSP) system

Reason "02" Loss of the Disability Tax Credit (DTC)

DTC ineligibility, no longer requires closing an RDSP. However, the loss of DTC eligibility remains an acceptable reason to close a plan, should the holder request the closure. For a plan closure, the date of being no longer DTC eligible will serve as an indicator for the repayment period. Closing an RDSP during the year the beneficiary turns 51, the AHA period decreases by a year (the 9 -year period prior to loss of DTC) and decreases by a year each subsequent year until the year the beneficiary turns 60 when the AHA becomes nil.

If the holder requests to close the RDSP:

• issue a DAP to the beneficiary
• repay any AHA to the Government of Canada
• submit a 102-10 transaction with closure reason "02" to the CDSP system

Reason "03" Transfer

Relinquishing issuer

• Ensures that all pending transactions and errors have been resolved
• Stops all automated payments
• Sends all funds to the receiving issuer
• Submits a 102-10 transaction with closure reason "03" to the CDSP system

Receiving issuer

• Submits the contract registration package with the transfer indicator set to "Yes"
• Consults the Transfer information extract file Record type (RT) (RT 971) to confirm amount received and contacts the relinquishing issuer if any discrepancies

Receiving and relinquishing issuer

• Consult the monthly Contract status file (RT 951) to confirm the registration status of the plan and the transfer status

Reason "04" Plan de-registered (non-compliant)

• Issue a DAP to the beneficiary
• Repay any AHA to the Government of Canada
• Submit a 102-10 transaction with closure reason "04" to the CDSP system

Reason "05" Other

A holder can only request a voluntary closure when the RDSP meets 1 of the following conditions:

1. there is no property left in the RDSP
2. there is only the AHA left
3. the holder requests a withdrawal of all remaining funds that is within the applicable payment rules and limits
   • Ensure that 1 of the 3 conditions has been met
   • Issue a DAP to the beneficiary
   • Repay any AHA to the Government of Canada
   • Submit a 102-10 transaction with closure reason "05" to the CDSP system