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A way to get free money from the government...

on Sun, 05/13/2012 - 16:33

I was chatting with an inside wholesaler the other day and we were discussing whether or not a company needs to have a lot of products to offer. I responded that I really don't think all companies need to have a lot of different solutions as we as advisors deal with a lot of companies already. All the companies only need to make sure they focus what they do best and advisors will pick between products and solutions. 

We continued to chat on different things and we both found that there are only a few companies offer RDSP (Registered Disability Saving Plan), and among those, most of them are big banks. On top of that, most people have not even heard of RDSP and people don't understand how it works. Most reason behind it, the government had not been promoting it. Just like RESPs, still lots of parents still haven't set that up for their kids because people are not too sure how RESP works.

One thing RDSP is different from any other registered plans out there is that: the government is giving out free money. Yes, free money, as long as you open an account for your disabled family member, that account is eligible to receive the free money (they called it "disability savings bond"). I updated my facebook status with that piece of information, and I got a response saying that "there is nothing like "free" money...always a catch". 

Not only people are not familiar with it, most people won't even believe it...


The bond, as it is free money, you do have to fall under a set of criteria to be eligible to receive it. The first thing is that the beneficiary (the disabled person) has to be 18; and there is an income cap. If the family income is less than $42,707, there is a formula on how that bond (up to $1,000 a year) is being calculated, but I bet you won't question the way CRA does their calculation, as long as we do have the chance to get free money from them!!


Contribution on the other hand, is treated similar to RESP, which is not tax deductible (unlike RRSP), but the government will match your contribution (like RESP in a way). However the matching formula is a bit complex because the match is based on family income. 


So, if your family income is less than $85,414, than you will get a grant of $3,500 by contributing $1,500, that's close to 2.5 times return!! One thing that I am not too happy with RDSP is that the grant will only paid until the beneficiary 49 years old.


If you know anyone who might be eligible for the RDSP, please let them know NOW. 

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