Who knew that this time of year had so many financial events? You have the RRSP deadline, tax preparation time and for some another important event. At the beginning of February I receive the Annual RDSP Statement of Grant Entitlement from my son’s RDSP.
What is the RDSP Statement of Grant Entitlement ? It is the yearly statement from the Government that states the maximum grant available for the year and the amount I need to deposit in my son’s account to receive the grant.
If you receive this you will see the following box that explains all things in terms of contributions and grants.
From this simple table we can deduce so much information about the RDSP grant program.
- My son is receiving the minimum grant for this year of $1000. This is due to my family income being at the top of their scale (but not that high in my scale). In the future it will be based on my son’s income (after he turns 18). If the Max Grant available was $0 (Zero) it would usually mean the holder is no longer eligible for grants.
- The maximum grant he could receive this year would be $10,500, which might be possible after his income is the trigger for grants.
- We need only contribute $1000 to my son’s RDSP to receive the $1000 grant (thus a 100% grant).
The income level that the grant is based on uses the previous years CRA submission. My son’s income level won’t be used until he turns 19, but then his grant potential will increase notably.
What isn’t mentioned is the the limit of $70,000 in grants over the lifetime of the RDSP holder. This suggests (for me) a strategy of waiting until my son turns 19 before making large additions to the RDSP. This strategy should allow him to receive the maximum grant level.
Also not mentioned is Grants are paid into the RDSP until the end of the year my son turns 49 years of age.
The maximum contributions for the lifetime of the RDSP is $200,000 overall contribution.
Finally the Canada Disability Savings Bond is also not mentioned, because of my family income. For those with lower incomes, this is a reason to open an RDSP even if you don’t have much money to put into it.
Remember my son’s RDSP is currently being held in a TD Direct Investment RDSP.
Please Come Back
As part of my infamous back-log of unfinished essays, I have many more on this subject and other RDSP related topics, so please come back soon.
The Government Web-site on the topic: InfoCapsule 12: Carry forward of grant and bond entitlements.