An exciting change to RDSPs is set to take effect sometime this year. Earnings in an RESP will be eligible to
be rolled-over to an RDSP on a tax-free basis if the plans share a common beneficiary. There will be certain conditions that have to be met before the roll-over can occur.
Firstly, it will be necessary the beneficiary must meet certain age and residency requirements regarding RDSP rules.
Secondly, one of the three following conditions must be met:
1. The beneficiary has a severe and prolonged mental impairment that is reasonably likely to prevent the beneficiary from pursuing post-secondary education;
2. The RESP has been in existence for a minimum of 10 years and each beneficiary is at least 21 years of age and not currently pursuing post-secondary education;
3. The RESP has been in existence for more than 35 years.
It is important to note that the income portion of the RESP will not be eligible to attract the Canada Disability Savings Grant although it will be considered a contribution. The rolled-over amount also cannot cause the RDSP to exceed the $200,000 contribution limit.
This offers another planning tool for parents of a child with a disability. If you have a child with a disability, make an appointment to meet with one of our lawyers to discuss your unique estate planning.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.
