RDSP Deposit Obfuscations Continue

It is that time of year, when I transfer money into my son’s Registered Disability Savings Plan (RDSP), and I continue to be disappointed by TD. I spoke to a very nice young man on the phone, who followed the  prescribed  method, by transferring money from my trading account to my son’ s account. We were chatting while the transaction bounced around the TD computers, and I asked, ” Are TD ever going to allow me to contribute from my Chequing account?”, and the  young man optimistically responded he thought that this might happen sometime soon .

As most of my regular readers know, I ask this question each time I speak to a TD rep , and I usually tweet the same question to TD.

I received assurances that this circuitous savings method would be updated soon. It has been many years that I have had this RDSP set up, yet, I continue to have to follow this diagram.


Deposit Route for Money to My Son’s RDSP

I can deposit to my RRSP, to my children’ s RESPs, but the RDSP continues to be a step too far. Please remember that the TD Direct Investing RDSP is the best product for RDSPs that I can find, but it does have a few shortcomings.

My savings methodology continues to be:

  • Every pay cheque, I transfer a specific amount to my TD trading account
  • I have set up automatic reminders in my calendars to tell me to call TD to do the transfer.
  • I spend 15 minutes chatting with a very nice person from TD who helps me out, and optimistically says that the system will be better
  • A few days later use the funds to rebalance the account (a sleepy portfolio).

Is There a Positive View on This?

The optimistic view on this is that this does force me every 6 months to rebalance and check the portfolio, which is true. This way the portfolio remains relatively well-balanced, and when the governments grant money comes in I can re-balance again.

I would rather be able to deposit funds directly to the RDSP account, from my Chequing account, removing many steps in the process.

Yes, I have written about this before:


5 Steps to an RDSP

So I am blatantly stealing this from Kerry K at Squawkfox, but because she thought of it talking to me, I’ll take partial credit for it. Here are 5 steps to an RDSP, they may seem hard, but you can do it.

  1. Get your child a Social Insurance number. This is the first piece of the puzzle, but it is vital. Your child will also need it for an RESP too.
  2. Build your team. This was an excellent turn of phrase, because you are going to need it to get an RDSP. A Doctor, an accountant, a nurse practitioner, an Occupational Therapist and others can be valuable members of this team.
  3. With your Doctor or Medical professional fill in the CRA forms to start the process to get a Disability Tax Certificate. The DTC is another key part of the puzzle, without this, you cannot open an RDSP. Yes it is not easy, but you need to do it yourself, to ensure you get all the money you are due.
  4. Go to a Bank and open an RDSP account. Sounds simple, doesn’t it? It isn’t that easy, due to the banks disinterest in the program. As I have said, the only full investment vehicle I can find is TD Direct Investment.
  5. Put money into the account! If you have low income, you will still get the Disability Bond money which adds up. Depending on your income, the government will match moneys you put into the plan.

While the whole RDSP process seems daunting, it is still an important financial tool to help out the disabled. There is help out there, but, be careful who you get help from.

Kerry’s Version

Kerry’s version is much more eloquent, I figure I should include it, given I am cribbing from it.


DTC RDSP Vicious Circle

While chatting with Kerry from Squawkfox, Mrs. C8j and I did some research and an interesting point was found, about the DTC RDSP vicious circle.

The non-refundable nature of the DTC has created a situation where some low-income disabled people don’t even bother to apply for the DTC, thinking it won’t benefit them. That can often be a mistake, as DTC certification has become a necessary requirement for a number of other government programs, such as RDSPs (registered disability savings plans) and the child disability credit.   “

That one left me quite upset. There is data about how few RDSPs are out there, but this explanation rings far too true for my liking.

This issue exists with RESPs too. Low-income families, think they need to save a lot to make the RESP system work. No! Open the account, put a small amount in there, but you might be eligible for the Canada Learning Bond, which is free money.

The Canada Disability Savings Bond

Getting back to RDSPs, there is a similar benefit for low income families. The Canada Disability Savings Bond is $1000 a year that can be deposited in your RDSP, even if you don’t make a deposit. This is why it is important to help folks with the RDSP.

No one should be leaving this kind of free money on the table.

The DTC RDSP vicious circle is what caused my wife to say, “The whole system is like navigating the fire swamp in the Princess Bride”.  That is a very apt analogy.


RDSP Providers : TD Investments Continues to Annoy

It is that time of year again, for me to go through the odd set of steps to move money into my son’s TD Direct Investing RDSP account . First let me point out that the TD Direct Investment RDSP is the best one (i.e. the best of the RDSP Providers ) that I can find on the market (do not be confused TD has a  TD Mutual Fund version, you should ignore), in terms of its ability to allow me to invest in what I want, and  receive the correct Government grants.

Now that I have said that TD is the best of existing RDSP Providers, allow me to now clarify that to actually put money into this account is the most convoluted, horse manure interface that could be concocted by a set of Lawyers and Accountants (and possibly throwing in a Modern Dance Choreographer). I have written previously about the steps I must take to put money into this account, however, this last time I got a glimpse at the end of the deposit part of the process.

Previously I pointed out that the steps were:

RDSP Money Path for RDSP Providers

RDSP Money Path (using Easyline over phone)

So note that I cannot do this on-line in 1 step. I can put money into my trading account using a normal automatic transfer mechanism (step 2), so some of it is automated. I dutifully every pay cheque transfer an amount into my trading account to build up the money for the RDSP account (yes, I still think they are one of the best RDSP Providers, but this is driving me crazy).

What I found out from this last session on the phone was that step 3 is not actually a straight forward transfer, it is actually an E-mail sent from the lucky phone representative who I talk to on the phone, to some magical over-lord who does the actual transfer. Read that sentence again, the RDSP program at TD is so convoluted that their own representatives are not allowed to do a simple transfer, they must ask someone else to do it? #Seriously?!?

I am staring to wonder just how exciting will it be to withdraw money from this system? Again let me please reiterate this is the best RDSP Provider out there (currently).



RDSP the Savings Plan Nobody Knows About

I seem to have collected a few dedicated readers who continue to struggle with the RDSP (Registered Disability Savings Plan) vehicle (as do we all), and from one of them, I got the following e-mail:

Thanks! There are some non-independent advisors out there (associated with a bank or other financial institution) who have developed a specialty in RDSPs out of personal interest, but I have yet to meet an independent one. So far independent advisors know less about RDSPs than we do.

This e-mail came in response to an answer I had written about the ability to slide funds from an RESP to an RDSP (should the child involved not go to a registered training program that the RESP could be used for). If you are looking for more information on this read the CRA page, RDSP Bulletin No. 4it explains the rules around this.

I try very hard to help folks with RDSPs as best I can, but sometimes I am out of my league. With most of my advice, I tell folks they should check with the CRA or another trained professional. It is really disheartening to hear that most independent advisors don’t know about the RDSP program.

What Next ?

I continue to harass the big banks about this, but the RDSP continues to not be on their radar scopes. TD Waterhouse offers an actual account, that is as good as it gets for folks who want to have a finer control on the investments (i.e. not just buy Bank Mutual Funds), but it continues to have shortcomings too (i.e. unable to set up an automatic savings schedule transferring money from a checking account directly to the RDSP account).

Friend of this site Ellen Roseman continues to try to help out as well, and for that I am thankful.


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