“It’s the most underutilized, but most beneficial savings plan available to persons with disabilities,” says Deon. “The RDSP is sometimes thought of as a ‘too-good-to-be-true’ program but it actually delivers what it promises.”
WHAT IS AN RDSP?
Many families worry about how a loved one with disabilities will be cared for in the future. Thanks to the RSDP and generous federal grants and bonds, Deon says it’s now easier for people with disabilities to save for their long-term security. It’s also very important to know that having an RDSP and earning income from an RDSP does not impact upon other supports and income received by a person with a disability.
Even if a person with a disability (or their family) is unable to make contributions, Deon says there are funds available through the federal government in the form of savings bonds, to a lifetime maximum of $20,000 which can be invested and provide in excess of $175,000* of lifetime income commencing at age 60, without a family paying anything. (*Assumptions: Age 20, DTC dated 2010, five per cent investment return.)
If there is the ability to contribute to the RDSP, the government provides grants with an annual contribution of $1,500, generating up to $3,500 in grants depending on the family’s or beneficiaries’ income. There is a lifetime maximum of $70,000 in grants available from the federal government.
WHO QUALIFIES FOR AN RDSP?
Everyone aged 49 and younger who has the Disability Tax Credit is eligible for an RDSP. Hancock calculates there are 11,000+ people across Newfoundland and Labrador who qualify for the program, but sadly, only about 23 per cent have opened up RDSPs.
Once you’ve started your RDSP, Hancock says he can go back and access up to 10 years’ worth of missed savings bonds and grants depending on when the disability tax credit was issued.
WHY HAVEN’T MORE PEOPLE HEARD OF RDSPs?
Deon says that many advisors and financial institutions haven’t made much effort in promoting the RDSP because of a failure to effectively accommodate persons with disabilities either via ease of accessibility or limited knowledge of the program.
He was recently introduced to an individual who’d been told by her advisor that an RDSP “would be of no value” for her son with a disability. Deon crunched the numbers and called her back to report that with the combinations of bonds, grants and investment growth her son could earn life-time income of $253,000. She happily opened an RDSP for him.
“It’s a shame to think about how much federal money has been left on the table over the last 12 years because people didn’t know about it,” says Deon. “There’s no other program that can better level the playing field, financially, for persons with disabilities.”
HOW TO OPEN AN RDSP
Deon takes a personal approach to helping persons with disabilities and their families start their RDSP journey. He’ll sit down with families in their homes, if they are comfortable, and walk them through every step of opening an RDSP. It’s a simple process that takes no more than an hour, and there are no fees or charges.
Once he’s completed the paperwork with the family, he works with one of the top three RDSP suppliers in Canada — Mackenzie Financial in Toronto. Deon’s colleague there, Vice President Carol Bezaire, is also passionate about the RDSP program. As soon as it launched in 2008, she thought of her nephew, Andrew, who has disabilities.
“I called my sister and said ‘You have to get this for him.’ They did, and they’ve put $1,500 in every year since 2009. Now it’s worth about $71,000,” says Bezaire.
She says at least 500,000 Canadians qualify for an RDSP but barely 221,000 actually have one, so she encourages anyone who thinks a family member may qualify to talk to a financial advisor with experience in RDSPs — like Deon.
“Deon is dedicating his business to this because he understands the importance of them,” says Bezaire. “He knows it’s a great opportunity for people with disabilities and their families.”
RDSP PROGRAM HAS ‘ZERO DOWNSIDE’
During his travels across the province to meet with families, Deon says it’s unfortunately all too common for people with disabilities to “slip through the cracks” and miss out on the money to which they’re entitled.
He recently helped organize a GoFundMe campaign for a Baie Verte gentleman with Cerebral Palsy who was about to turn 49. Because there was only time to make a single contribution once he signed up for his RDSP, the fundraiser ensured he could contribute $3,500 so he could go back to pick up $24,000 in savings bonds and grants. By the time the man turns 60, he’ll have about $60,000 of lifetime income available to him.
Deon says that whether a person with disabilities is a young child or is 49 years old, it’s important for them to open a RDSP as soon as possible.
“Every person who has the disability tax credit should make it a priority to call Hancock Financial Solutions to set up an RDSP. There’s zero downside,” says Deon. “But there are still so many people who don’t know about RDSPs — and that’s what I’m trying to fix. We’re taking this on with a passion.”
For free assistance setting up a Registered Disability Savings Plan (RDSP) with Hancock Financial Solutions, please call 1-866-634-0071 or email email@example.com.