BMO RDSPs
What people are saying
RDSPs
“I am very pleased that this long-term financial support is now available and
I congratulate BMO Bank of Montreal for being the first major bank to
offer RDSPs.”
Honourable Jim Flaherty, Minister of Finance.
Government of Canada Press Release,
December 23, 2008.
“BMO is very pleased to be the first major Canadian financial institution to
offer the RDSP. In our view, the RDSP is a terrific savings vehicle that
enhances the financial security of people with disabilities.”
Ed Legzdins, Senior Vice President,
Retail Investments, BMO Financial Group.
December 22, 2008.
1
July 2010
BMO RDSPs – Introduction
It started with BMO
A Registered Disability Savings Plan (RDSP) is a
new registered investment plan for Canadians
with disabilities
RDSPs encourage individuals and families to
save for the long term financial security of
persons with disabilities who are eligible for
Disability Tax Credits
BMO Financial Group became the first bank to
offer RDSPs on December 22, 2008
2
July 2010
RDSPs
RDSP – Beneficiary eligibility

Must be a Canadian resident

Have a Social Insurance Number

Under age 60

Disability Tax Credit (DTC) eligible
– An individual may apply for the DTC by
completing Form T2201, which can be found
on the Canada Revenue Agency’s website
http://www.cra-arc.gc.ca/E/pbg/tf/t2201/

Only one beneficiary can be named to an RDSP

A beneficiary can only have one RDSP
3
July 2010
RDSPs
RDSP Account holder eligibility
WHEN BENEFICIARY IS AN ADULT
(18 OR OLDER)

A beneficiary who has the legal capacity to
manage their finances

If a beneficiary does not have legal capacity to
manage finances, the holder of a plan must be the
guardian or other representative who is legally
authorized to act on behalf of the beneficary
WHEN BENEFICIARY IS A MINOR
(UNDER AGE 18)

A legal parent(s) of the beneficiary

A guardian or public department/agency
who is legally authorized to act on behalf
of the beneficiary
4
July 2010
RDSPs
RDSP – Contributions

Anyone may contribute to the plan with the
written authorization of the plan holder

Contributions are not tax deductible

Contributions grow on a tax deferred basis
while in the plan

The lifetime contribution limit is $200,000
per beneficiary

There is no annual contribution limit

Contributions are permitted until December 31st
of the year in which the beneficiary of the plan
turns 59
5
July 2010
RDSPs
RDSPs
Canada Disability Savings Grant
RDSPs
Contributions to an RDSP may qualify for the Canada Disability
Savings Grant

Canada Disability Savings Grant (CDSG)

Maximum annual CDSG – $3,500 (family net income less or equal to $81,941*)

Maximum annual CDSG – $1,000 (family net income greater than $81,941*)

Maximum lifetime CDSG available per beneficiary is $70,000

Family Net Income is based on:

Where the beneficiary is a minor, the family’s net income

Where the beneficiary is an adult, the beneficiary’s net income (and spouse if applicable)

CDSG Eligible Until:

The last day a beneficiary is eligible to receive the CDSG is December 31st the year in
which the beneficiary turns 49 years of age
*Income amounts shown are for 2010 based on income tax returns filed for the 2008 tax year. Income thresholds indexed annually by CRA.
6
July 2010
RDSPs
Canada Disability Savings Grant
Annual Family Net
Income
Less than or equal
to $81,941*
Greater than $81,941*
or no income info with
CRA
RDSPs
Matching CDSG on Annual
RDSP Contributions
Maximum Annual
CDSG
On the first $500 in annual
contributions
($3 for every $1 contributed)
$1,500
On the next $1,000 in annual
contributions
($2 for every $1 contributed)
$2,000
On the first $1,000 in annual
contributions
($1 for every $1 contributed)
$1,000
Remember, when the beneficiary turns 18 years of age, CDSG payments are based on their net annual income (and spouse if applicable)
*Income amounts shown are for 2010 based on income tax returns filed for the 2008 tax year. Income thresholds indexed annually by CRA
7
July 2010
.
RDSPs
Canada Disability Savings Bond
RDSPs
In addition to the Grant, the Canada Disability Savings Bond is available
to beneficiaries whose net family income is lower than $39,065.
Canada Disability Savings Bond (CDSB)

Maximum annual CDSB – $1,000 (family net income less than or equal to $23,855*)

Smaller amounts of CDSB with net incomes between $23,856* - $40,969*

The maximum lifetime CDSB available is $20,000
Family Net Income is based on:

Where the beneficiary is a minor, the family’s net income

Where the beneficiary is an adult, the beneficiary’s net income (and spouse if applicable)
CDSB Eligible Until:

Last day a beneficiary is eligible to receive the CDSB is December 31st the year in which
the beneficiary turns 49 years of age
* Income amounts shown are for 2010 based on income tax returns filed for the 2008 tax year. Income thresholds indexed annually by CRA.
8
July 2010
RDSPs
Canada Disability Savings Bond
RDSPs
RDSP CONTRIBUTIONS ARE NOT REQUIRED TO OBTAIN THE BOND
Annual Family Net Income
Canada Disability Savings Bond
(Annually)
$23,855* or less
$1,000
Between $23,856* and $40,969*
Prorated amount of $1,000
More than $40,969*
None
Remember, when the beneficiary turns 18 years of age, CDSG payments are based on their net annual income (and spouse if applicable)
* Income amounts shown are for 2010 based on income tax returns filed for the 2008 tax year. Income thresholds indexed annually by CRA.
9
July 2010
Continuous Savings Plan in an
RDSP over 20 years…
RDSPs
$400,000
$350,000
$300,000
Your Contribution
$250,000
RDSP Bond
$200,000
RDSP Grant
$150,000
Total Plan
$100,000
$50,000
$0
After 30 Years

Your contribution of $125 a month = $1,500 a year ($30,000 total)

RDSP Bond of $1,000 a year to a maximum of $20,000 lifetime

RDSP Grant of $3,500 a year to a maximum of $70,000 lifetime
Results in $395,265 plan total (assuming a 6% rate of return over 30 years)
10
July 2010
Lump sum contribution
of $10,000 annually
RDSPs
$1,000,000
$900,000
$800,000
$700,000
Your Contribution
$600,000
$500,000
RDSP Bond
$400,000
RDSP Grant
$300,000
Total Plan
$200,000
$100,000
$0
After 30 Years

Your contribution of $10,000 a year to a maximum of $200,000.

RDSP Bond of $1,000 a year to a maximum of $20,000 lifetime.

RDSP Grant of $3,500 a year to a maximum of $70,000 lifetime.
Results in $991,039 plan total (assuming a 6% rate of return over 30 years).
11
July 2010
RDSP – Payments (withdrawals)
from the RDSP
RDSPs
THERE ARE 2 TYPES OF PAYMENTS (WITHDRAWALS) FROM AN RDSP:
1.
Lifetime Disability Assistance Payment – (LDAP)
2.
Disability Assistance Payment – (DAP)

Made up of a portion of contributions, income and Grants and Bonds

Can be used for disability and non-disability related expenses

Only the beneficiary can receive payments from the RDSP
“10 YEAR AHA RULE” APPLIES TO ALL PAYMENTS FROM AN RDSP

On all RDSP payments, all Grants and Bonds received in the 10 years
preceding the RDSP payment must be returned to the government

This amount is known as the “assistance holdback amount”
12
July 2010
RDSP – Lifetime
Disability Assistance Payment

LDAPs are recurring annual payments that, once
start, continue until the death of the beneficiary.

LDAPs may begin at any age but must
commence by the end of the year in which the
beneficiary turns 60 years of age

Waiting until age 60 to begin payments from the
RDSP will ensure all Grants and Bonds received
up to age 49 would be protected againts the 10Year AHA Rule.

The total amount of money that can be withdrawn
from an RDSP each year is limited to a maximum
annual amount, set by the government, to ensure
the RDSP will provide an annual payments for
the remainder of the beneficiary’s life.
13
July 2010
RDSPs
RDSP – Lifetime
Disability Assistance Payment
RDSPs
The maximum annual LDAP amount is limited by a legislative formula
that considers the fair market value of the plan and the life expectancy
of the beneficiary

value
Maximum LDAP
=
3

+
life expectancy
=
3
14
age
Maximum LDAP example:
$300,000 RDSP, beneficiary LE 80, age 60
$300,000

–
+
80
–
60
$13,043
annual maximum LDAP
LDAPs are subject to the 10-Year AHA rule on any Grants and Bonds
received in the past 10 years.
July 2010
RDSP –
Disability Assistance Payment
RDSPs
DAPS ARE A LUMP SUM PAYMENT MADE FROM THE RDSP TO THE
BENEFICIARY OR TO THE BENEFICIARY’S ESTATE
value
Maximum DAP
=
3

+
life expectancy
=
3
15
age
Maximum DAP example:
$300,000 RDSP, beneficiary LE 80, age 27
$300,000

–
+
80
–
27
$5,357
maximum DAP
DAPs are subject to the Assistance Holdback Amount rule
July 2010
RDSP – Taxation

The RDSP payments (withdrawals) are made
up of the following:
– Contributions
– Income growth
– Grants and Bonds

Contributions are NOT taxable

Income growth, Grants and Bonds are taxable
in the hands of the beneficiary
16
July 2010
RDSPs
RDSP and other Government
Programs
AN INDIVIDUAL’S RDSP WILL NOT IMPACT ANY OF
THE FOLLOWING PAYMENTS:

Old Age Security (OAS)

Guaranteed Income Supplement (GIS)

Canada Pension Plan (CPP)

Goods and Services Tax Benefit (GST Benefit)

Most provincial disability support programs –
please check with your province
17
July 2010
RDSPs
RDSP – Death of beneficiary
UPON THE DEATH OF A BENEFICIARY:

Grants and Bonds received in the 10 years
preceding the beneficiary’s death must be
returned to the government

The remaining holdings of the plan – Grants
and Bonds older than 10 years, income growth
and contributions – will pass to the
beneficiary’s estate

The plan’s proceeds will be distributed
according to the individual’s will

If the individual dies without a will, the funds
will be distributed according to provincial
estate laws
18
July 2010
RDSPs
RDSP – Loss of eligibility
UPON LOSS OF DTC ELIGIBILITY:

The RDSP must be collapsed

Grants and Bonds received in the 10 years
preceding the beneficiary’s loss of DTC
eligibility must be returned to the government

The remaining holdings of the plan – Grants
and Bonds older than 10 years, income growth
and contributions – become an asset of the
beneficiary

Proceeds to beneficiary are taxable in the
hands of the beneficiary (net of contributions)
19
July 2010
RDSPs
RDSP – Trained BMO RDSP
representatives
RDSPs

BMO RDSPs are sold and serviced exclusively through our award
winning investment call centre, BMO Investment Centre (BMOIC)

BMOIC Investment Specialists have completed a 3-hour government
facilitated training program and can answer your RDSP questions

BMO RDSPs feature a full range of available investment solutions
suitable for all long-term investors including BMO Guaranteed
Investment Certificates (GICs), BMO Mutual Funds and managed
solutions portfolios

BMOIC Investment Specialists are experienced in opening government
plans such as RESPs, RRSPs, RRIFs and TFSAs and providing
investment solutions for these plans

BMO IC is open Monday to Friday 7 AM to 11 PM (ET) and Saturday
9 AM – 5 PM (ET) BMOIC provides service in our two official
languages plus Cantonese and Mandarin
20
July 2010
RDSP – Opening a BMO RDSP
RDSPs
Simply call
the BMO Investment Centre (BMOIC)
at
1-800-665-7700

A BMOIC sales representative will take you through the RDSP account
opening process by asking the required questions to open an RDSP and
applying for the Canada Disability Savings Grant and Bond. Also your
investment goals will be discussed in order to choose the right
investment solution for you

All application forms will then be sent to you for signing. Once signed,
the forms are returned to BMOIC for account opening and processing
21
July 2010
Web resources
BMO.com
About RDSPs, Grants, Bonds, Opening an RDSP
http://www4.bmo.com/investments/0,4629,35649_6233061
0,00.html
HRSDC
Overview of RDSPs
http://www.hrsdc.gc.ca/eng/learning/education_savings/pro
moter/infosession_odi_sept07.shtml
CRA
Overview of RDSPs
http://www.cra-arc.gc.ca/tx/rgstrd/rdsp/menu-eng.html
22
July 2010
RDSPs
RDSPs
®™ Trade-marks of Bank of Montreal, used under license.
This communication is intended for informational purposes only and is not,
and should not be construed as, investment advice to any individual.
Particular investments and/or trading strategies should be evaluated
relative to each individual’s investment objectives and professional advice
should be obtained with respect to any circumstance.
23
July 2010
RDSPs
Thank You!
July 2010