Saving for the Long-term
In terms of providing long-term financial security for the individual, the recently introduced Registered Disability Savings Plan (RDSP) is so attractive that it can be used as the cornerstone of their financial plan. Through generous government contributions, RDSPs encourage families to save for the future of someone who qualifies for the Disability Tax Credit.
|Central to the RDSP’s great appeal is that your family’s contributions may attract government grants worth up to $70,000. Those who cannot afford to make any investments may still qualify for up to $20,000 in bonds. The RDSP is eligible for government assistance until the year the individual turns 49. The RDSP is so compelling; it can be used as the cornerstone of the disabled individual’s financial plan. || |
The RDSP is so compelling; it can be used as the cornerstone of the disabled individual's financial plan.
Similar to Registered Retirement Savings Plans (RRSPs) and Registered Education Savings Plans (RESPs), contributions to an RDSP grow tax-free until eventually withdrawn by the individual, when earnings and government contributions (but not the contributions themselves) will be taxed at what may be a low rate. Importantly, the disability assistance payments will have no impact whatsoever on the individual's federal government benefits such as Old Age Security, Canada Pension Plan and the GST/HST credits to name just a few.
Because contributions grow tax-free within the RDSP, families should strive to maximize investments at the earliest opportunity, while also taking advantage of potential government contributions. We can help you identify an optimal level of annual contributions to capitalize on tax-sheltered growth and grants. Since family income determines the size of government contributions until the year the disabled individual turns 18, it may be a good idea to wait until then to start the plan.
For RDSPs and other assets, our IPC team will use our disciplined portfolio management system to choose the best balance of investments for the individual, reflecting personal risk tolerance, time horizon and needs. As we do not use internal portfolio managers, IPC has the freedom to select from some of the world’s leading investment specialists to oversee each component of the portfolio. In addition, we will monitor the managers and measure their performance to ensure each portfolio performs as expected. This is all part of our comprehensive service and what has helped make us one of the leading financial planning firms in Canada.