InfoCapsule 12: Withdrawals (DAP and LDAP)

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Preface

A disability assistance payment (DAP) is a withdrawal made from a Registered Disability Savings Plan (RDSP) at the request of the holder(s). It is a payment made from an RDSP to the beneficiary or their estate.

A lifetime disability assistance payment (LDAP) is a recurring withdrawal made from an RDSP, payable to the beneficiary. It is a payment that once started, cannot stop, and must be paid at least once a year until either the beneficiary is deceased or the plan is terminated.

A withdrawal includes a proportion of each of the following amounts available for payment:

• Contributions
• Earnings (including rollovers)
• Canada Disability Savings Grant (CDSG)
• Canada Disability Savings Bond (CDSB)
• Designated provincial programs

Rules

Rules related to withdrawals:

• Can be requested at any time
• Must respect payment rules and limits
• A DAP and an LDAP can be paid at the same time
• Repayment rules may apply
• The beneficiary does not have to be resident in Canada to receive a payment
• A withdrawal cannot be made if the fair market value (FMV) of the plan, after the withdrawal, is less than the assistance holdback amount (AHA)

Repayment rule

If it has not been 10 years since the last CDSG and CDSB was deposited into the RDSP, a withdrawal will result in the repayment. Issuers must calculate and repay the lesser of the 2 following amounts:

1. The proportional amount (3 to 1)
2. The assistance holdback amount (AHA) before the payment

Primarily Government Assisted Plan (PGAP)

In a year when the RDSP is a PGAP, which is a plan that contains more CDSG and CDSB than contributions, a beneficiary aged 27 to 58 can request a withdrawal without the consent of the holder(s).

LDAP specific rule

Payments may begin at any time, but no later than December 31 of the calendar year in which the beneficiary reaches 60 years of age.

Taxable and non-taxable portions

All portions of a withdrawal, except for contributions, are taxable.