It is possible to transfer a beneficiary's Registered Disability Savings Plan (RDSP) (the prior plan) to another RDSP (the new plan) for the same beneficiary. The decision to name the beneficiary is irrevocable, which means that an RDSP cannot be transferred from one beneficiary to another.
There are two types of payments from an RDSP:
Disability Assistance Payment (DAP)
Any payment made from an RDSP to the beneficiary or to the beneficiary's estate.
Lifetime Disability Assistance Payment (LDAP)
A Disability Assistance Payment that, once payments begin, must be paid out annually until the death of the beneficiary.
Note: A DAP may cause repayment of grants and bonds received in the 10-year period preceding the request for payment.
All DAPs include taxable and non-taxable portions that are determined by a formula by the Canada Revenue Agency (CRA).
The "Assistance Holdback Amount," is made up of all the Canada Disability Savings Grants (CDSG) and Canada Disability Savings Bonds (CDSB) that have been paid into the RDSP within a 10 year period for a beneficiary by the Government of Canada, and that have not been repaid.
The following events will trigger the repayment of the entire Assistance Holdback Amount to the Government of Canada:
- the RDSP is terminated
- the plan ceases to be an RDSP due to plan deregistration
- the beneficiary is no longer DTC eligible
- the beneficiary dies
If a Disability Assistance Payment is made from the RDSP, the repaymnet of the CDSG and CDSB will be the lesser of $3 of CDSG and CDSB for every $1 of DAP of the Assistance Holdback Amount.
If the Dealer of your Scotia® RDSP is The Bank of Nova Scotia, Canadian currency funds in the cash portion of your account are eligible to be insured by the Canada Deposit Insurance Corporation.
If the Dealer of your Scotia RDSP is Scotia Securities Inc.(SSI), Canadian currency funds in the cash portion of your account are held in trust by SSI. SSI accounts, except accounts held by residents of Quebec, are eligible for protection by the Mutual Fund Dealers Association of Canada Investor Protection Corporation. The cash in an SSI account is not eligible for deposit insurance offered through the Canada Deposit Insurance Corporation.