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RDSPs offer secure financial future for Canadians with disabilities

(NC) Many parents worry about what will happen to their children after they're gone, especially those caring for a child with a disability. But according to personal finance experts, Canada's Registered Disability Savings Plan (RDSP) can ease worries by offering a way for families to actively plan for the future of their disabled loved one.

Introduced in 2008 by the federal government, RDSPs are a national, registered matched savings plan for individuals with disabilities. RDSPs are designed to assist eligible Canadians with disabilities and their families save for their long-term financial security. For every dollar saved, the government will match up to three dollars. Canada is the first country in the world to have RDSPs, with an estimated 500,000 people across Canada expected to benefit from the initiative.

“Even if you have limited assets, setting up an RDSP can ensure a secure financial future for your child with a disability,” says Wade Stayzer, Vice President, Retail and Investment Services at Meridian, Ontario's largest credit union. “An RDSP allows you to save money for the future without paying tax on the earnings..”

Meridian offers the following tips on RDSPs:

How do RDSPs work? In its simplest definition, an RDSP can be considered a pension plan for Canadians living with disabilities. As a registered savings plan, RDSPs allow people with disabilities and the individuals taking care of them to save funds to help ensure their financial security. Contributions into the fund are tax-free until the money is withdrawn. A key benefit of an RDSP is that the government provides additional contributions and grants.

Who is eligible to open an RDSP: Any Canadian resident who is eligible for the Disability Tax Credit, are under the age of 60 and have a social insurance number. If the individual is under the age of 18, a parent or legal guardian can set up the plan on their behalf.

Anyone can help: Contributions to an RDSP can be made by anyone including friends, family and the individual plan holder. Funds can be deposited into the plan up until the end of the year the beneficiary (the person living with the disability) turns 59. While there is no maximum yearly contribution limit, the plan has a lifetime limit of $200,000.

When funds can be withdrawn: While the funds in the plan are generally intended to provide income during the beneficiary's latter years, funds can be withdrawn at any time. However, withdrawals from an RDSP may affect government contributions and result in tax consequences.

As RDSPs are complex savings vehicles, with changes just being made in January 2014, Stayzer stresses that you should work with a trusted financial advisor to assess how this savings tools can fit in your overall financial plan.

For more information about RDSPs, visit to find the closest Meridian location near you.

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