By Jason Heath, CFP on June 12, 2026 Estimated reading time: 3 minutes
How do you take RDSP withdrawals?
By Jason Heath, CFP on June 12, 2026 Estimated reading time: 3 minutes
Learn how RDSP withdrawals work, including the 10-year rule, grant repayment requirements, taxes, and mandatory withdrawals after age 60.
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Registered disability savings plans (RDSPs) were created in the 2007 federal budget, and the first accounts were opened in December 2008. It took a while for financial institutions to offer them and, even now, you cannot open RDSPs everywhere.
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Most Canadians with RDSPs have only ever deposited money. This is a primer on withdrawing from these specialized accounts.
Opening an RDSP
If you qualify for the disability tax credit (DTC), you can open an RDSP. The disability tax credit is a non-refundable tax credit for Canadians who have a qualifying physical or mental impairment.
You apply to the Canada Revenue Agency (CRA) for approval, and beyond the annual tax savings potential, the DTC is the gateway to opening an RDSP.
Government grants and bonds
RDSP contributions attract government grants and bonds that vary depending on the beneficiary’s adjusted family net income.
For income below $114,750 for 2025, the grants are:
$3 for every $1 contributed on the first $500 contribution (so, up to $1,500 a year of grants)
$2 for every $1 contributed on the next $1,000 (so, up to $2,000 a year of additional grants)
For higher income families, there is a dollar for dollar grant on the first $1,000, maxing out at $1,000 of grants.
10-year rule
Withdrawals from an RDSP are called disability assistance payments (DAPs). If you take a DAP, you may have to repay government grants and bonds. The repayment is quite steep: $3 for every $1 withdrawn.
You must wait at least 10 years from the last government grant to withdraw without this repayment applying. The repayment is capped at the total grants received in the previous 10 years. So, the motivation is for an RDSP to be a long-term saving tool.
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If you do withdraw earlier and repay grants, you are still better off than had you not contributed in the first place. You had more money invested than you would have otherwise.
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Grants are only payable until age 49, so account holders might need to wait until age 60 to withdraw without repayments applying.
Your original RDSP contributions can come out tax free, but grants and investment growth are taxable to the beneficiary.
When you turn 60
Withdrawals must begin by the end of the year the beneficiary turns 60. These post-59 withdrawals are called lifetime disability assistance payments (LDAPs).
The minimum annual withdrawal is calculated using a government formula that considers the beneficiary’s age and the value of the RDSP. The calculation is complex and is the responsibility of the financial institution administering the account.
Each withdrawal, regardless of age, is split between a tax-free portion and a taxable portion. The financial institution uses a government formula to figure out this complex tax treatment.
Shortened life expectancy
If you have a health issue that may shorten your life, you can get a doctor to certify this so you can convert your account to a specified disability savings plan (SDSP). This approval may allow you to withdraw up to $10,000 of taxable withdrawals annually without forced grant and bond repayments, subject to annual LDAP limit requirements and other conditions.
How to use your RDSP
In a perfect world, an RDSP is used as a long-term retirement savings tool. This may be unusual for a parent opening an RDSP for a child, especially if they have other siblings. Parents do not normally contribute to registered retirement savings plans (RRSPs) for minor children, so the account introduces the challenge of maintaining equity among children.
Regardless of how you choose to use an RDSP, whether it is for you or for a child or grandchild, the government grants and bonds are lucrative, and the disability tax credit savings can help offset some of the costs of a disability.
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You do not need a withdrawal plan when you open an account, but it pays to understand how the withdrawal rules work for you and your family.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. and Objective Tax & Accounting Inc. in Toronto. He does not sell any financial products whatsoever.
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