New savings tool for people with disabilities
By Aaron Broverman • Bankrate.com
"The two things we're encouraging people to do is to sign up for the Disability Tax Credit and file their tax return for the prior year because it's that tax credit the next year's grants and bonds will be based on," says Brodhead.
The fine print
Currently, RDSP contributions are not counted as assets or income
against the disability income benefit in B.C., Newfoundland, Saskatchewan
and the Yukon; all other provinces have yet to render a decision
on how the RDSP will interact with government benefits. "We've been
in discussions with them about this and we're pretty confident they're
going to come out in favor of the RDSP," says Brodhead.
Withdrawals from an RDSP commence automatically once you turn 60, but there's no restriction on when you can start taking money out. However, if you want to receive the full amount of available grants and bonds, you must wait at least 10 years after you receive your last government contribution. If you withdrawal early, you must pay back the last government contribution you received.
The federal government has confirmed to PLAN that the RDSP will be offered at five financial institutions nationwide by mid-December. "They have yet to say which banks those are, but at least one is national," says Brodhead. Sixteen other institutions have expressed interest, but it will take until 2009 before they're on board, which is too bad because people with disabilities have already waited long enough for the RDSP to be available and, as Brodhead points out, the RDSP is absolutely vital for their future financial lives.
"People with disabilities have a much higher cost of living than the average person, and their opportunity for employment is greatly restricted. We see the RDSP as a way of supplementing their existing income support and allowing families to contribute financially without fear that it will put them over the asset limit and they will be disqualified from benefits. We want people to understand that people with disabilities have something to contribute, and the RDSP will give them an opportunity to do that."
Aaron Broverman is a disabled freelance writer living in Toronto. He keeps a disability issues blog called ThisAbility.
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