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Video: Registered Disability Savings Plan transfers

From: Employment and Social Development Canada

Transcript

Transfer

The term “transfer” refers to the transactions that take place when all funds in the Registered Disability Savings Plan (RDSP), as well as the relevant information held by the financial institution of the prior plan, are moved from 1 RDSP to another for the same beneficiary. The transfer happens between 2 different financial institutions.

Authorization

The plan holder of the new RDSP does not have to be the same as the holder of the prior RDSP. However, the prior holder must consent to the transfer.

General conditions for a transfer

A transfer can occur from 1 RDSP to another if the following conditions are met:

Key players

The transfer process involves 4 main players:

Each 1 of these players has a crucial role in helping the RDSP transfer process and must work together to successfully complete the transfer.

Responsibilities

Holder

When transferring an RDSP from 1 financial institution to another, certain steps must be completed for the transfer to be successful.

The first step the holder(s) needs, is to choose a new financial institution to open a new RDSP. Next the holder will need to inform the new financial institution that an RDSP is open at a prior financial institution. Once this is done, it is time for the holder to complete sections 1 and 2 of the RDSP Transfer form EMP5611 of the prior RDSP.

A holder may be added or modified during a transfer if they meet all holder requirements as defined in the Income Tax Act.

When there is a change in the holder(s) during a transfer, the new financial institution will need to send the following record type (RT):

The holder and beneficiary (if over the age of majority) must complete the Holder Consent to a Registered Disability Savings Plan (RDSP) Transfer form.

Receiving issuer

The receiving issuer needs to open a new plan and complete section 3 of the transfer form. The receiving issuer must also submit a registration package and submit a new Canada Disability Savings Bond request.

When opening a new plan, the receiving issuer must submit the registration information transaction (RT 101) to establish a contract in the Canada Disability Savings Program (CDSP) system and to provide the required elements to register the contract with the Canada Revenue Agency. The CDSP system will validate the information provided and assign a registration “status” to the submission.

All components of the registration information record must be submitted during the same production cycle and must have the same issuer transaction number.

The registration package must contain:

Information about the primary caregiver must be included in the contract information component when the beneficiary is under the age of majority, for any of the years where unused entitlement may be carried forward. If this information is not provided, ESDC will not be able to pay the bond and the lowest grant matching rate will apply.

If the Canada Disability Savings grant and/or Canada Disability Savings bond were paid in the prior plan and the holder wishes for the RDSP to continue receiving the Canada Disability Savings grant and Canada Disability Savings Bond, they must:

The application for Canada Disability Savings Grant and/or Canada Disability Savings Bond is on the Service Canada website.

Relinquishing issuer

The relinquishing issuer needs to complete sections 4 and 5 of the RDSP Transfer form. They must keep a copy of the RDSP Transfer form and return the original to the receiving issuer. They will have to send all funds in the RDSP to the receiving issuer along with any relevant information that has not been provided by ESDC. Once this is done, they will need to terminate the prior plan and submit RT 102-10 to ESDC according to the requirements of the Interface transaction standards.

In other words, the relinquishing issuer must:

If the relinquishing issuer doesn’t close the plan, the receiving issuer won’t be able to register the new plan.

To close the contract, the relinquishing issuer must submit the:

Employment and Social Development Canada

ESDC is responsible to advise the receiving issuer and the relinquishing issuer of unresolved transfers.

They also send the successfully processed financial transactions of the relinquishing issuer to the receiving issuer (transfer information extract file historical record) upon registration of the new RDSP.

For the “resolved” RDSP transfer transactions, ESDC will provide to the receiving issuer institution all historical financial transactional information in its possession from all previous contracts for a particular beneficiary. This historical record will be sent in a Transfer information extract file (RT 971).

Completed transfer

A transfer is completed when:

Transfer form

When transferring a Registered Disability Savings Plan, financial institutions must use the RDSP Transfer form (EMP5611).

This form contains information that must be exchanged between the financial institutions and ESDC.

It consists of 5 sections:

Sections 1 through 4 are self-explanatory but Section 5 Notional Balances of the Relinquishing RDSP seem to cause some confusion.

The notional account represents the total of the amount of the payments made into the RDSP. The difference between the notional account balance and the market value is earnings.

Explanation of Section 5 of the RDSP Transfer form EMP5611

Time to go over Section 5.

Knowledge check

Time for a knowledge check.

Who are the 4 main players involved with an RDSP transfer?

  1. The holder(s)
  2. The relinquishing issuer
  3. The receiving issuer
  4. ESDC
  5. All the above
  6. None of the above
Answer

The answer is: e. All the above

Thank you.

[The final screen has the Canada wordmark.]

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