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:
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.
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
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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