How do I withdraw money from my RDSP?

You can withdraw from your RDSP through Disability Assistance Payments (DAPs) at any time or Lifetime Disability Assistance Payments (LDAPs) which must begin by December 31 of the year you turn 60. Withdrawals are taxable to the beneficiary and may require repaying grants and bonds received in the past 10 years.

What is the 10-year rule for RDSP withdrawals?

The 10-year rule requires that any government grants or bonds received within the past 10 years be repaid at a ratio of $3 for every $1 withdrawn (the assistance holdback amount). This is to prevent people from contributing, receiving grants, and immediately withdrawing.

Are RDSP withdrawals taxable?

Yes, RDSP withdrawals are taxable to the beneficiary. However, only the portion representing grants, bonds, and investment growth is taxable. Your original contributions are returned tax-free since they were made with after-tax money.

What happens to my RDSP if I am no longer disabled?

If you no longer qualify for the Disability Tax Credit (DTC), your RDSP can remain open for up to 5 years. If DTC eligibility is not restored, the plan must be closed and all grants and bonds from the previous 10 years must be repaid.

RDSP Withdrawal Rules in Canada: Complete Guide (2026)

RDSP Withdrawal Basics

The Registered Disability Savings Plan (RDSP) is designed for long-term savings for people with disabilities. Withdrawals have specific rules designed to preserve funds while allowing access when needed.

Feature	Details
Who can withdraw	Plan beneficiary or holder
When to start LDAPs	By December 31 of year turning 60
Tax treatment	Grants/bonds/growth taxable; contributions tax-free
10-year holdback	May need to repay recent grants/bonds

Types of RDSP Withdrawals

Lifetime Disability Assistance Payments (LDAPs)

Feature	LDAP Rules
What	Regular recurring payments
When they must start	By December 31 of year turning 60
Frequency	At least annually
Minimum amount	Required once started
Maximum amount	Based on formula

Disability Assistance Payments (DAPs)

Feature	DAP Rules
What	One-time or occasional withdrawals
When available	Any time
Frequency	As needed
Maximum amount	Based on formula
Grant/bond repayment	May trigger holdback

The 10-Year Holdback Rule

When you withdraw from an RDSP, you may need to repay government grants and bonds received in the previous 10 years.

Assistance Holdback Amount (AHA)

Component	How It Works
Definition	Total grants + bonds from past 10 years
Repayment ratio	$3 repaid for every $1 withdrawn
Maximum repayment	AHA amount
Timing	Repaid from RDSP, not out-of-pocket

Example

Situation	Amount
Grant/bonds in past 10 years (AHA)	$20,000
Withdrawal requested	$10,000
Repayment required ($3:$1)	$20,000 (capped at AHA)
Net to beneficiary	Less than requested

Holdback Exceptions

Exception	Result
Shortened life expectancy	AHA may be reduced or waived
RDSP primarily funded member	Repayment may not apply

Maximum Withdrawal Limits

LDAP Maximum Formula

Once LDAPs begin, the maximum annual withdrawal is calculated as:

Maximum LDAP = Fair Market Value of RDSP ÷ (83 − Age at start of year)

If plan contains AHA, additional limits apply.

Example LDAP Calculation

Factor	Value
RDSP value	$200,000
Beneficiary age	55
Formula	$200,000 ÷ (83 − 55)
Maximum LDAP	$7,143/year

DAP Withdrawals

Situation	Maximum DAP
Plan mostly contributions	Greater flexibility
Plan has AHA	Limited by holdback rules
After age 59	LDAP formula applies

Tax Treatment of Withdrawals

Taxable Portion

Component	Tax Treatment
Government grants (CDSGs)	Taxable
Government bonds (CDSBs)	Taxable
Investment growth	Taxable
Your contributions	Tax-free (return of capital)

Withdrawal Ratio Formula

Each withdrawal includes a proportional mix of taxable and non-taxable amounts:

If RDSP Contains	Withdrawal Breakdown
60% grants/bonds/growth	60% taxable
40% contributions	40% non-taxable

Tax Form

Form	Purpose
T4A slip	Reports taxable portion of withdrawal
Line 12500	Where to report on tax return

RDSP Primarily Funded Member Rules

If your RDSP is “primarily funded” by your own contributions (and family’s), different rules may apply:

Status	When It Applies
Primarily funded	FMV on Jan 1 minus AHA > $0, and ratio test met
Benefit	May withdraw without full holdback repayment
Purpose	Allows access to your own money

Shortened Life Expectancy

If a medical professional certifies that the beneficiary has a shortened life expectancy (likely to live 5 years or less), special rules apply:

Feature	Shortened Life Expectancy Rules
AHA repayment	Reduced or eliminated
Withdrawal limits	May be removed
LDAP requirements	More flexibility
Documentation	Medical certificate required

What Happens at Different Ages

Before Age 59

Action	Rules
DAP withdrawals	Allowed, subject to holdback
LDAPs	Not required yet; if started early, at least $1/year must be paid annually
Contributions	Can continue until age 59
Grants	Available until age 49

Age 60

Requirement	Details
LDAPs must begin	By December 31 of year turning 60
Minimum payment	LDAP formula amount (generally much more than $1 unless balance is very small)
Maximum payment	Based on formula
Contributions	No more contributions allowed

After Death

Outcome	What Happens
Plan closes	Must close by December 31 of following year
Grants/bonds (past 10 years)	Repaid to government
Remaining funds	Paid to estate
Taxes	Taxable portion reported

Provincial Benefit Interaction

Province	Treatment of RDSP
Most provinces	RDSP assets exempt from social assistance calculations
Withdrawals	May affect monthly disability benefits
Check	With provincial disability program for specifics

Strategic Withdrawal Planning

Minimize Holdback Repayment

Strategy	How It Helps
Wait 10+ years after last grant	AHA will be $0
Withdraw gradually	Spread over multiple years
Front-load contributions	Build own money vs. grants

Tax Planning

Strategy	Benefit
Time withdrawals	Lower income years = lower tax
Coordinate with other income	Stay in lower brackets
Spread withdrawals	Avoid pushing into higher brackets

Step-by-Step: Making a Withdrawal

Process

Contact your RDSP provider (bank, credit union, broker)
Request withdrawal form — specify DAP or LDAP
Calculate holdback — provider determines AHA impact
Tax withholding — may be withheld at source
Receive payment — to beneficiary

Documentation Needed

Document	Purpose
Withdrawal request form	Initiates process
Identity verification	Standard security
Medical certificate	If shortened life expectancy

Common Questions

Can I withdraw my original contributions tax-free?

Yes, but each withdrawal contains a proportional mix of contributions (not taxed) and grants/bonds/growth (taxed). You can’t choose to withdraw only your contributions.

What if I need emergency funds?

You can make a DAP withdrawal at any time, but:

May trigger AHA repayment
Taxable portion will be taxed
Could affect provincial disability benefits

Can someone else receive the payments?

Payments must go to the beneficiary. The holder or a legal representative may help manage funds if the beneficiary cannot.

RDSP vs RRSP Comparison

Feature	RDSP	RRSP
Contributions	After-tax	Tax-deductible
Withdrawals	Partially taxable	Fully taxable
Government matching	Yes (grants/bonds)	No
Withdrawal age	60 for LDAPs	71 mandatory
Holdback	Yes (10-year rule)	None

Key Takeaways

LDAPs must begin by end of year you turn 60
10-year holdback may require repaying recent grants/bonds
Only grants/bonds/growth are taxable; contributions returned tax-free
Strategic timing can minimize taxes and holdback
Shortened life expectancy provides more flexibility
Consult your RDSP provider before withdrawing

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