InfoCapsule 19: Plan closure

From: Employment and Social Development Canada

Disclaimer: RDSP issuers

The information contained on this page is technical in nature and is intended for Registered Disability Savings Plan (RDSP), Canada Disability Savings Grant (CDSG) and Canada Disability Savings Bond (CDSB) issuers. For general information, visit the RDSP section.

Consult this page frequently for newer versions. The following laws and regulations take precedence over information contained in InfoCapsules in the event of discrepancies:

  • Income Tax Act
  • Canada Disability Savings Act
  • Canada Disability Savings Regulations

Alternate formats

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:

Note: Before closing a plan, it should first be confirmed as "registered" by the Canada Revenue Agency (CRA).

Reason "01" Death of the beneficiary

The RDSP must be closed no later than the end of the calendar year following the year of the beneficiary's death.

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

Budget 2019 (March 19, 2019) announced that effective immediately, issuers are no longer required to close an RDSP when a beneficiary becomes DTC-ineligible. 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.

If the holder requests to close the RDSP:

Reason "03" Transfer

Relinquishing issuer

Receiving issuer

Receiving and relinquishing issuer

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

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

Note: Opening a new plan at a later date will not reinstate any repaid entitlements as they are linked to the beneficiary's Social Insurance Number.

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