Take money out of a registered disability savings plan

Types of payments a beneficiary can receive

A registered disability savings plan (RDSP) beneficiary can receive 2 types of payments from their RDSP:

The financial institution administering the RDSP can only make a payment to the beneficiary if there is enough money in the RDSP to repay the assistance holdback amount after the payment is made. The assistance holdback amount is the total of any grant and bond in the beneficiary’s RDSP that has not yet vested. For more information go to InfoCapsule 17: Assistance Holdback Amount.

Retirement savings rollover and education savings rollover amounts are considered earnings from the plan for taxation purposes. These amounts, as well as grants, bonds and investment earnings that form part of a payment are all taxable and must be reported on a T4A slip for the beneficiary. However, after the beneficiary’s death, payments made to the beneficiary’s estate are taxed to the estate.

Determine the payment rules for taking money out of a plan

An RDSP can find itself in one of the following four situations:

Which situation applies to the RDSP?

  • Contributions are greater than grant and bond amounts at the start of the year
  • Grant and bond amounts are greater than the contributions at the start of the year
  • Payment request is made for a specified year
  • Plan is a specified disability savings plan

Related links:

Income Tax Act, section 146.4

RC4460, Registered Disability Savings Plans

InfoCapsule 14: Payment rules and limits

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