Registered Disability Savings Plans: Why the right financial advice is essential

Many of us are familiar with RRSPs, and the need to plan ahead for our retirement. Those with children are also likely familiar with the benefits of a Registered Education Savings Plan (“RESP”), a way to save today for your child’s future education while also taking advantage of additional contributions from the federal government.

But what about families that include someone with physical or cognitive disabilities that leave them in need of care or support? Planning for their future needs and our own retirement can be made easier with a Registered Disability Savings Plan (“RDSP”) explain Emily Hofmann, Portfolio Manager and Shawn Fetter, Associate Portfolio Manager with Vancouver Island’s Alitis Investment Counsel (“Alitis”). Both are also Certified Financial Planners with Alitis’ related company, Alitis Wealth Planning which offers fee-for-service comprehensive financial planning.

What is a RDSP?

A RDSP is a powerful savings strategy designed to secure the financial future of individuals with disabilities. Hofmann and Fetter emphasize the adaptability of these plans, which can be created and contributed to by family members, such as parents and grandparents, and sometimes by the beneficiaries themselves.

This flexibility allows for a tailored approach that meets the varied needs of both donors and recipients.

Individuals with high-functioning disabilities might pursue higher education, gain employment, and eventually contribute to their own RDSP. Conversely, some individuals might rely entirely on their family for RDSP contributions throughout their life. This underscores the importance of early and consistent investment, ensuring the plan is robust enough to support the beneficiaries regardless of their circumstances.

Financial planning and professional guidance

Portfolio Manager Emily Hofmann and Associate Portfolio Shawn Fetter

Ensuring families’ financial plans serve their own financial needs while also supporting their loved ones requires a comprehensive approach that benefits from a qualified financial planner experienced in these diverse scenarios, note Hofmann and Fetter. For example, the Alitis Team can provide strategies tailored to your unique needs, integrating immediate financial contributions with long-term estate planning and tax considerations.

The disability tax credit is a crucial first step, offering significant annual tax savings. Once secured, families can maximize government grants and bonds available through RDSPs. Currently, the government matches donor’s contributions to a maximum of $3,500 in one year, and up to $70,000 over the beneficiary’s lifetime, making it a highly favorable savings plan.¹

The broader impact of RDSPs

RDSPs provide more than immediate financial security; they offer peace of mind for families, knowing a structured plan will support their loved one’s future needs.

RDSPs also ensure beneficiaries maintain eligibility for other government subsidies and programs. Improper planning can inadvertently disqualify individuals from receiving these essential benefits, further underscoring the need for careful, informed financial planning.

Investing in an RDSP is a lifelong process. Families must regularly review and update their plans to adapt to changing circumstances. This ongoing commitment is vital to ensuring that the beneficiary’s needs are met throughout their life.

If you’re considering an RDSP or have questions about the Alitis Approach, please contact us.