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Disabled man in wheelchair by bus. (Photos.com)
Disabled man in wheelchair by bus. (Photos.com)

Getting money out of an RDSP

If the beneficiary recovers Add to ...

If the beneficiary recovers from their disability, they must close their RDSP.

A beneficiary is considered to have recovered from their disability if they no longer qualify for the Disability Tax Credit

Closing the RDSP

The RDSP must be closed by December 31 following the first calendar year that the beneficiary no longer qualifies. Here's what happens to the funds:

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  • Any government grants and bonds that have been in the RDSP for less than 10 years must be repaid to the government.

  • The beneficiary will receive any funds left in the RDSP after any government grants and bonds are repaid.

Tax consequences

The beneficiary may have to pay tax on the portion of the money in the RDSP that comes from:

  • government grants and bonds held in the RDSP for more than 10 years, and

  • investment earnings.

The beneficiary won't pay tax on the portion that comes from contributions made to the RDSP.

You'll have to repay any government grants and bonds that have been in the RDSP for less than 10 years.

Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca

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