Canadian Tax and
Financial Information
RDSP Termination

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Financial Planning  ->  Disabilities -> RDSPs -> Termination of an RDSP

Termination of a Registered Disability Savings Plan (RDSP)

When a registered disability savings plan (RDSP) is terminated, any amounts remaining in the plan, after any required repayments of CDSG and/or CDSB, are to be paid to the beneficiary or the beneficiary's estate by the end of the following year.

An RDSP will be terminated if

bulletthe beneficiary dies, or
bulletthe beneficiary ceases to have, for at least a full calendar year, the severe and prolonged impairments which resulted in eligibility for the disability tax credit.

The RDSP may be de-registered if it ceases to qualify for status as an RDSP because it does not comply with all the terms and conditions that were put in place when the plan was set up, or if it does not comply with rules in the Income Tax Act.  This will result in a deemed disability assistance payment equal to

bulletthe fair market value of the plan, less
bulletthe assistance holdback amount

According to the Department of Finance explanatory notes, the assistance holdback amount would have to be repaid to the government when the RDSP is terminated or de-registered.  The rule for this is expected to be in the Canada Disability Savings Act Regulations, which are not yet available.

Next:  Rollovers to an RDSP from the RRSP/RRIF or RPP of a deceased person

Back to RDSP main page

Revised: May 27, 2018

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