Could I have more than one RDSP account?
I received this question from one of my email subscribers two weeks ago. The simple answer is no. Under the current rule, each beneficiary with prolonged disability may only have one RDSP at any given time. I believe this setup is to avoid confusion, especially when trying to keep track for the disability savings grants and bonds.
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He was also confused if he could contribute into another RDSP once the $200,000 contribution limit has been reached. According to the CRA: “There is no annual limit on amounts that can be contributed to an RDSP of a particular beneficiary in a given year. However, the overall lifetime limit for a particular beneficiary is $200,000.“ That means when the contribution limit is reached, one cannot open and contribute into another RDSP.
What if I’m dissatisfy with the current RDSP Issuer?
RDSP issuer is the financial institution where you open your account with. If I remember correctly, when the RDSP was first introduced back in 2008, transfer was not allowed. As the rule has improved, you may now transfer your account to another RDSP issuer where you find it more comfortable to work with. However, just like the transfer of other registered plans, do not withdraw the money from the account on your own, as this would trigger clawback of government grants, bonds while tax implication may also be resulted. The right way to do it is to fill out the proper RDSP transer form, HRSDC EMP5499. This way all the accumulated grants, bonds, contribution and investment growth can be carried over to the new RDSP account. In most cases, the application for the CDSG and CDSB will have to be submitted again. Note that, depending on the financial institution that you deal with, there could be transfer fee, redemption charge, or other costs involved. Make sure you understand the costs involved before switching.