The principal attraction of Registered Disability Savings Plans (RDSPs) are the generous government benefits, known as the Canada Disability Savings Grant and Canada Disability Savings Bond. These amounts are set out in Canada Disability Savings Act, and are tracked and paid out by Employment and Social Development Canada (ESDC).
Canada Disability Savings Bond (CDSB)
CDSB is non-contributory, meaning bonds will be paid for each year the beneficiary is eligible for an RDSP. The amount of CDSB to which the beneficiary is entitled is based on the family income thresholds in the info-graphic below.
The life time maximum amount of CDSB that a beneficiary can receive is $20,000.
Formula = $1,000 - [$1,000 x (Family Income - $30,450)/$46,605-$30,450)]
For 2018, if the disabled individual's family income is $42,000, the 2018 CDSB entitlement would be $285.05.
$1,000 - [$1,000 x ($42,000 - $30,450)/($46,605-$30,450)]
Canada Disability Savings Grant (CDSG)
CDSG provides contribution matches at 100% or 200% and 300% based on different family income thresholds.
The life time maximum of CDSG that can be received is $70,000.
Carry Forward Measure
All unused CDSG and CDSB entitlements can be accessed for the previous 10 year period. This measure allows beneficiaries to make up missed years at a rate of $10,500/year for CDSG and $11,000/year for CDSB. Older, higher grant eligibility is paid out first.
A 25 disabled individual opens an RDSP in 2018. Family income since 2008 has been less than the threshold in each of the subsequent years. Beginning in 2008 the beneficiary has accrued, but not yet accessed, $15,000 in 300% CDSG, $20,000 in 200% CDSG and $10,000 in CDSB (2008-2017).
The $1,500 in 300% CDSG, $2,000 in 200% CDSG and $1,000 in CDSB for 2018 are the current year's entitlement and are not subject to the carry forward measure.
If $3,500 is contributed in 2018, the beneficiary will receive the maximum annual CDSG carry forward amount of $10,500 (7 years of 300% grants) and $10,000 in CDSB. Total amount in the RDSP after the receipt of the grants and bonds will be $24,000, with only $3,500 representing actual contributions.
The ratio of contributions to grants received in so high because the accessed grant entitlements represent the oldest, highest grant amounts over the last 10 years.
After grant receipt, there remains $4,500 of 300% CDSG and $20,000 in 200% grants from 2008-2017 in addition to the grant entitlements for 2018. All of which can can be caught up in 2019 up to the $10,500 annual carry forward measure limit.