The RDSP is a tax-deferred registered savings plan open to Canadian residents eligible for the Disability Tax Credit.
For eligible investors, now is the time to contribute to a Registered Disability Savings Plan (RDSP) before the December 31, 2009 deadline. Contributing before the deadline ensures eligible investors qualify for annual government assistance available to RDSPs in addition to the tax-efficient benefits the plan has to offer. Unlike an RRSP, contributions must be made before the end of the year.
The RDSP is a tax-deferred registered savings plan open to Canadian residents eligible for the Disability Tax Credit, their parents and other eligible contributors. Up to $200,000 can be invested within the plan with no annual contribution limits. While contributions are not tax deductible, all earnings and growth accrue tax-deferred.
"Not only are RDSPs a tax-efficient investment solution for Canadians with disabilities and their families, the plan can also help provide invaluable peace of mind," says Jamie Golombek, Managing Director of Tax and Estate Planning for CIBC. "RDSPs also offer investors the ability to supplement the plan with Canada Disability Savings Grants (CDSGs) and Canada Disability Savings Bonds (CDSBs)."
A main feature of the RDSP is the availability of government funds deposited directly into the plan in the form of matching CDSGs and, potentially, CDSBs for RDSP beneficiaries age 49 and under. The government will contribute up to a maximum of $3,500 in CDSGs and up to $1,000 in CDSBs annually, depending on the net income of the beneficiary's family.
"In addition to all the other advantages RDSPs offer, they can also protect beneficiaries from losing valuable disability benefits in most provinces," adds Golombek. "I would urge those eligible who have not already opened an RDSP to contact their financial adviser immediately to discuss making the most of this important opportunity before the end of the year."
CIBC's RDSP product line-up includes a broad selection of CIBC Mutual Funds, including savings, income and growth funds, and the CIBC family of managed portfolios. More information on the CIBC Registered Disability Savings Plan and a full report by Jamie Golombek, are available on cibc.com.
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