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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

Making lump-sum withdrawals Add to ...

The beneficiary can make lump-sum withdrawals — also called disability assistance payments (DAPs) — from their RDSP at any time.

How withdrawals work

If the beneficiary withdraws grants and bonds that have been in the RDSP for less than 10 years, they can't keep them. This money must be repaid to the government. There is an exception for shortened life expectancies, which is described below.  

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Withdrawals don't affect other government benefits

Withdrawals from an RDSP do not affect a beneficiary's eligibility for:

Tax consequences

The beneficiary doesn’t pay tax on the original contributions that are withdrawn from the RDSP.

The beneficiary will pay tax on:

  • investment earnings that are withdrawn from the RDSP, and

  • grants and bonds that are withdrawn from the RDSP and that have been in the RDSP for 10 years or more.

When you take money out of an RDSP, you'll pay tax on any government grants or bonds, and investment earnings, but not on your contributions.

If the beneficiary's life expectancy is 5 years or less

If the beneficiary’s life expectancy is 5 years or less, the beneficiary can withdraw up to $10,000 a year in taxable savings from their plan:

  • If any of that money is from grants and bonds that have been paid into the plan in the last 10 years, the beneficiary won't have to repay these amounts to the government.

  • The beneficiary can also withdraw a pro-rated amount of their plan contributions.

Learn more about the withdrawal rules for beneficiaries with shortened life expectancies.

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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