RDSP opening checklist: steps from approval to first contribution

Start with disability tax credit approval

A registered disability savings plan can only be opened for someone the CRA has approved for the disability tax credit. Approval comes from Form T2201, which has two parts: you complete one, and a medical practitioner certifies the effects of the impairment in the other. The CRA says both parts must be submitted the same way, either both through the digital form or both on paper, or it cannot process the application.

The CRA also advises applying before you file a tax return, because a credit application filed at the same time can delay the assessment while it is reviewed. If the practitioner charges a fee to complete the form, you pay it, but it may be claimable as a medical expense. If you are still waiting on a decision, our disability tax credit application checklist covers that step in more detail, so this guide picks up once you have the approval.

Check that the beneficiary and holder both qualify

The beneficiary is the person who will eventually receive the money. According to the CRA, the beneficiary needs DTC approval, a valid social insurance number, Canadian residency when the plan is opened, and must be under 60, which means a plan can be opened until the end of the year they turn 59. A person can have only one RDSP at a time. The plan holder, who opens and manages the plan, also needs a valid social insurance number.

Grants and bonds stop earlier than the plan itself. They are paid on contributions until December 31 of the year the beneficiary turns 49. If the beneficiary is between 50 and 59, the plan can still be opened for tax-sheltered growth, but no new grant or bond is paid, so the benefit of opening is smaller.

Decide who will be the plan holder

If the beneficiary is under the age of majority, a legal parent, a guardian or another legally authorized person, or a public department or agency, can open the plan and be the holder. If the beneficiary is an adult who is able to enter a contract, they open the plan themselves, and the financial organization helps confirm this. Legal parents who hold a plan opened while the child was a minor can generally stay on as holders, and the adult beneficiary can be added as a joint holder.

Where an adult’s ability to sign a contract is in doubt and there is no legal representative, the CRA allows a qualifying family member, such as a spouse, common-law partner, parent or adult sibling, to open the plan. The CRA’s page says this measure ends on December 31, 2026, so if it applies to your family, speak to an issuer soon and confirm the current rule. A holder can later be changed by asking the financial organization.

Choose an issuer and open the plan

You open an RDSP directly with a participating bank, credit union or investment firm. You do not need an existing account there. Employment and Social Development Canada lists participating organizations and says the list is for information and is not an endorsement. Some providers that are not on the list may still offer the plan, so it is reasonable to call a few.

When you contact an issuer, ask what investments the plan allows, what fees apply, how they handle the grant and bond application, and what they need from you. Ask what identification and proof of DTC approval they need, and have the social insurance numbers of the holder and beneficiary ready. You apply for grants and bonds at the same time as you open the plan.

Plan contributions and what they unlock

Anyone can contribute with the holder’s written permission, so relatives can help. There is no annual limit, but the lifetime limit is $200,000 per beneficiary, and rollovers from retirement or education savings plans count toward it. Contributions are not tax deductible, and contributors do not get them back. Grants, bonds and investment growth do not count toward the $200,000.

The grant matches contributions at 300%, 200% or 100%, depending on the beneficiary’s adjusted family net income and the amount contributed, to a maximum of $3,500 in a year and $70,000 for life. The bond is up to $1,000 a year, to a lifetime maximum of $20,000, and needs no contribution. The CRA says the income thresholds are indexed every year, so confirm the current figures with the issuer rather than relying on an old table. Until the year they turn 49, the beneficiary should receive a Statement of Entitlement every February showing the grant available and the contribution needed.

Unused entitlements can generally be carried forward for up to 10 years, as long as the beneficiary met the eligibility rules, such as DTC approval and Canadian residency, in those years. Annual caps limit how much is paid in a catch-up year. This is why a plan opened late can still collect past entitlements. Illustratively, a family that has been eligible for several years might open a plan and find grant room waiting, and the Statement of Entitlement shows what is available.

File the tax returns and know the exit rules

To qualify for the bond or earn a grant, the CRA says the beneficiary must have filed returns for the past two years and must file every year the plan is open. For a child, grants and bonds are based on the parents’ or guardians’ income, and the beneficiary should start filing their own return from the year they turn 17 so the amounts stay correct from age 19.

Before money goes in, understand the way out. If you withdraw money while grants or bonds were paid in the last 10 years, you generally repay $3 for every $1 withdrawn, up to the grants and bonds paid in that period. Exceptions include withdrawals once regular payments start at 60 and plans where nothing was paid in the last 10 years, and special rules apply if DTC approval is lost, so ask the issuer before you withdraw. Regular withdrawals must begin by December 31 of the year the beneficiary turns 60. Grants, bonds and growth are taxable to the beneficiary when paid out, and contributions are not. Bring plan statements and any tax slips to your accountant, and ask how a withdrawal could affect provincial benefits.