[CalgaryPotato]

My 6 year old got the paperwork approved to be eligible for an RDSP going back to 2008.

I'm at the "high" income level of over $88K/year. So I'm assuming that he is only eligible for the minimum amount of grant money. (100% match on the first $1000 per year.) From what I understand I can also back contribute and get grant money of up to $10,000 at one time.

So my plan is to invest $8000 into it now, which should get $8000 in grant money returned. After that I'll invest $1000/year.

So now my questions.

1) Are any of my assumptions wrong?
2) My son is a complicated case, where the Dr's don't know some of his underlying causes and so there is a real possibility he could some day "catch up" to other children to the point where he would no longer qualify as disabled. Would this have any effect on the plan/grant money besides not being able to contribute any more? Does he have to take out the money at that point?
3) I keep seeing that $70,000 is the maximum lifetime grant amount, but that I can only contribute until he is 49. Should I assume, that unless I fall out of the high income category, the true maximum grant would be $49,000 in our case? How about once he's an adult? Could he contribute the money and have it based off of his income?
4) Because his future ability level is highly uncertain, I am still planning to pay into his RESP to fill up the maximum grant. My understanding is that if he doesn't go to school I can eventually merge this into his RDSP, and I'd just have to pay back the RESP grant money. Do you see any issues with this plan? (I have the funds to do both without borrowing)

I've read through a few of the links previously posted on here about RDSP, but since my questions are pretty specific I'm hoping to get some guidance, thanks in advance!

 

[Potato]

For #2 I believe he has to take the money out if he no longer qualifies as disabled:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rdsp-reei/dth-eng.html

 

[gardner]

On (3), I think once your son is 19 the income test is based on his own income (and his spouses) not the parents'. He may well, therefore, qualify for better benefits as a lower income earner.

He can grant permission for anyone to contribute to his RDSP, so his own low income will not restrict what can be contributed overall.

What province are you in? (edit: Duh, Alberta, I guess, CalgaryPotato ...) If you're in BC, read up in representation agreements for when your son is no longer a minor.

 

[KaeJS]

First off, I am fully trained on RDSPs and I deal with them inside and out as part of my day job. I will try to address all of your concerns here, but feel free to send me a private message now or in the future if you have any questions.

To start:

*Amount of CDSG grant when family income is $87,907 or less:

on the first $500 contribution—$3 grant for every dollar contributed, up to $1,500 a year.
on the next $1,000 contribution—$2 grant for every dollar contributed, up to $2,000 a year.

*Amount of CDSG grant when family income is more than $87,907:

on the first $1,000 contribution—$1 grant for every dollar contributed, up to $1,000.

^ You seem to know this already. This pretty much sums up your answer to your first question that your assumptions are not wrong. However, the maximum grant the government will provide in any given year is $10,500 and not $10,000. Yes, you may back track contributions to 2008 so long as your son has been eligible for the Disability Tax Credit since 2008 (which you have said he is - great!).

2) If your son is deemed to no longer be eligible for the Disability Tax Credit (DTC) in the future, the following occurs:

The RDSP account will be closed on your behalf. You cannot keep this account open and the bank will shut it down for you.

All of the government grant AND bond money will be returned to the government.*

A cheque will generally be issued TO YOU in the name of YOUR SON for the principle amount plus the growth/returns in the account. Tax must be paid on the earnings within the account, but obviously not on your principle.*

3) You are correct that $70,000 is the total grant amount.

Grants will automatically be based off of your sons income when he turns 18 years of age. With that being said, you should not assume $49,000 is your max out. You should assume $70,000 is your max out (provided you/he can contribute and take full advantage). It does not matter if this money comes from you or him, the only thing that matters is that he is 18+.

4) You may transfer only the accumulated income portion (gains) of an RESP to an RDSP.

One of the following criteria must be met in order to complete this transfer (which will not be a problem for you):

1. The child has a severe and prolonged mental impairment that can reasonably be expected to prevent the child from pursuing post-secondary education; or

2. The Education Plan has been in existence for at least 10 years, each beneficiary of the Education Plan is at least 21 years of age and no beneficiary of the Education Plan is pursuing post-secondary education; or

3. The Education Plan has been in existence for more than 35 years.


In regards to the money in the account, the government grants from the RESP will be returned to the government. You will have your principle contributions returned to you, as well.*

Please note that any accumulated income that is transferred from the RESP to the RDSP will NOT trigger grants within the RDSP account.

There is nothing wrong with your plan to use both accounts in combination at all. You are making the best financial decisions with the way you have thought this through.

I wish I could have made my post more organized for you, but it is 1am and I am typing this on my phone while lying in bed.

If there are any questions you have remaining, as I said, feel free to drop me a message. This is what I do.

 

[CalgaryPotato]

Thank you everyone for your answers. Very helpful...

 

[Calgary Bruce]

My 6 year old got the paperwork approved to be eligible for an RDSP going back to 2008.

I'm at the "high" income level of over $88K/year. So I'm assuming that he is only eligible for the minimum amount of grant money. (100% match on the first $1000 per year.) From what I understand I can also back contribute and get grant money of up to $10,000 at one time.

So my plan is to invest $8000 into it now, which should get $8000 in grant money returned. After that I'll invest $1000/year.

So now my questions.

1) Are any of my assumptions wrong?
2) My son is a complicated case, where the Dr's don't know some of his underlying causes and so there is a real possibility he could some day "catch up" to other children to the point where he would no longer qualify as disabled. Would this have any effect on the plan/grant money besides not being able to contribute any more? Does he have to take out the money at that point?
3) I keep seeing that $70,000 is the maximum lifetime grant amount, but that I can only contribute until he is 49. Should I assume, that unless I fall out of the high income category, the true maximum grant would be $49,000 in our case? How about once he's an adult? Could he contribute the money and have it based off of his income?
4) Because his future ability level is highly uncertain, I am still planning to pay into his RESP to fill up the maximum grant. My understanding is that if he doesn't go to school I can eventually merge this into his RDSP, and I'd just have to pay back the RESP grant money. Do you see any issues with this plan? (I have the funds to do both without borrowing)

I've read through a few of the links previously posted on here about RDSP, but since my questions are pretty specific I'm hoping to get some guidance, thanks in advance!

Long story short.
I have/had two disabled sons. One died. Both had RDSPs at TD.
I asked TD to transfer RDSP funds from the one who died into his surviving brother's RDSP.
It took over 2 months.
In the process TD decided I was dead and closed my accounts.
Also because of the delay in transferring funds the surviving son did not get the matching government grants.
Insult to injury TD still can't right their wrongs.