Budget 2012: The RDSP Changes

in deficit, Government, rdsp, RESP

I’ll stay away from the rest of the budget (don’t want to sound too much like a whiny Civil Servant (who said, Too Late!)), but there are changes to the RDSP program which is important to me and any other parents who have disabled children and those with disabled loved ones.

From this web site, the changes are:


The budget proposes the following changes that will increase the effectiveness of RDSPs:

  • Simplifying the process to open RDSPs for individuals who have reached the age of majority and lack contractual competence;
  • Reducing the repayment of Canada disability savings grants and Canada disability savings bonds in certain cases;
  • Introducing changes to the minimum and maximum withdrawal rules;
  • Allowing a tax-free rollover of registered education savings plan investment income into an RDSP;
  • Temporarily suspending the termination of an RDSP following cessation of eligibility for the disability tax credit if the beneficiary may qualify for the DTC again in the foreseeable future; and
  • Reducing the burden associated with administrative requirements.

The last point is good, because as I have said, setting up an RDSP with TD/Waterhouse really was a complicated issue.

A lot of these changes are designed to get more institutions to offer an RDSP to their customers (it is not available everywhere), but also make it swifter in implementing as well.

The ability to transfer the proceeds of an RESP into an RDSP is a good idea. If you have a child that becomes disabled, or is diagnosed later in life, the ability to take the funds that you had been saving for post-secondary education into a lifetime savings program for the child, just seems to make sense to me.

The temporarily suspending the termination of an RDSP is interesting as well, in case you have a disabled person whose cure” is mis-diagnosed, or they were unable to get their disability “reconfirmed” in a timely fashion, there is not a sudden closure of their RDSP, again, this seems to make sense to me.

The RDSP still seems to be a bit of a mystery to a lot of folks, but if you have a disabled loved one, I would strongly advise you to go find out more about the program. If there is money to be had from the government to help later in life, you should be trying to get that money as soon as you can.

{ 2 comments }

  • Marianne April 3, 2012, 1:41 PM

    This is the first that I’ve read about this and like you, I think the ability to change an RESP into an RDSP is a really good idea! Having just opened an RESP for my son, it gives me a bit of peace of mind to know that this is an option if something horrible were to happen.

    Reply
    • bigcajunman April 3, 2012, 2:21 PM

      Very true. It is rare that the government gives us a sensible decision so soon in a program.

      Reply

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