I recently received a question from a parent about the “Registered Disability Savings Plan“. Her question is if my child who currently is eligible for the “disability tax credit” later on recover, upon the loss of the eligibility, what would happen to her RDSP account. I quickly did some researches on this issue, and below are the details I found from the BMO.
UPON LOSS OF DTC ELIGIBILITY:
The RDSP must be collapsed
Grants and Bonds received in the 10 years preceding the beneficiary’s loss of DTC eligibility must be returned to the government
- The remaining holdings of the plan – Grants and Bonds older than 10 years, income growth and contributions – become an asset of the beneficiary
- Proceeds to beneficiary are taxable in the hands of the beneficiary (net of contributions)
Hope this would give you more insights about the plan. If you would like to obtain more information about the RDSP, feel free to contact me.
Wish you have a wonderful weekend!
[important][There are numerous changes to the RDSP due to the budget 2012. For more details, please click here to view the RDSP budget changes].[/important]