Dear Searching, I will start by saying there is no financial advice that you can rely on by reading anything on the internet and the disclaimers from professional financial firms are not motherhood statements. You really must seek professional advice before you act on anything or dismiss any opportunity. So, I am not providing you any advice and might only know a little bit more than you do. I do have a few piece of information that some people don’t know, even possibly your financial advisor.
You know the disability tax credit is not approved forever as some people’s conditions improve or they could review your situation “decide” you no longer qualify. Becoming ineligible for the DTC has implications for somebody who has an RDSP. Please don’t be scared by this statement, as all conditions are not the same, but that statement on your DTC certificate is not a motherhood statement. You need to understand the RDSP and it is somewhat complicated, to say the least… but the BEST thing that has come out for disabled people… assuming they understand what it is and what it is not (for example, it is not a piggy bank).
Second, while a person under 50 could qualify for grants or bonds into an RDSP, a person between 50 and 59 could lose out on a great financial opportunity, in at least one very specific situation, if they believed it NEVER made sense for anyone over 50 to open a RDSP. If you are over 50 and a financial advisor tells you “just forget RDSP’s because they make no sense for you” out of hand and doesn’t explore all the details in depth, then quite honestly, he doesn’t deserve your business and if you missed out on the following opportunity because of his advice, you should figure out what recourse you have.
Here’s one possible reason you MIGHT open an RDSP between age 50 and 59. If you are disabled and eligible for the DTC and financially dependent on a parent or grandparent, they might be able to roll over up to $200,000 of registered money from an RRSP/RPP/RRIF upon his death to you, which could defer a large amount of tax and make a large difference to your financial well being. There are MANY details that must be considered, so please do not take this information at face value and draw any conclusions or generalizations from it, as it is a very complex topic. Check it out on the Canadian government website - CRA Rollover RDSP RC4625.
This is one reason why it could make sense! There are other reasons it could make sense (and some where it doesn’t make sense). I’ll leave it at that.