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The potential drawbacks and risks of an RDSP - and how to avoid them


A Registered Disability Savings Plan (RDSP) is a savings plan for individuals with disabilities in Canada. RDSPs are designed to help individuals with disabilities and their families save for the future and provide financial support for the person with a disability.


While RDSPs can be a valuable tool for saving and supporting individuals with disabilities, there are also potential drawbacks and risks that individuals should be aware of.


One potential drawback of an RDSP is that it can affect an individual's eligibility for certain government programs.


For example, the Canadian government provides the Disability Tax Credit (DTC) to individuals with disabilities who meet certain eligibility criteria. To be eligible for the DTC, an individual's RDSP cannot have more than $200,000 in assets. If the RDSP exceeds this limit, the individual may no longer be eligible for the DTC.


Another potential risk of an RDSP is that the individual with a disability may not have control over the funds in the plan. RDSPs are typically set up and managed by the individual's parent, legal guardian, or other authorized person.


This means that the individual with a disability may not have direct access to the funds in the plan, and may not be able to make decisions about how the funds are used.


To avoid these potential drawbacks and risks, it's important for individuals with disabilities and their families to carefully consider the potential impact of an RDSP on government benefits and assistance, and to choose the right plan and financial institution for their needs.


It's also important to regularly review the RDSP and make sure it continues to meet the individual's needs and goals.


In conclusion, while RDSPs can be a valuable tool for saving and supporting individuals with disabilities, there are also potential drawbacks and risks that individuals and their families should be aware of.


By carefully considering these potential drawbacks and risks, individuals can avoid them and make the most of their RDSP.



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