By Garry Marr, Family Man,
Financial PostNovember 30, 2009
The registered disability savings plan, first introduced in the March 2007 federal budget, can be used by parents as a key planning tool for the future, writes Family Man columnist Garry Marr.
Former National Hockey League player Jim Kyte knows a little something about living with a disability: He was the first deaf NHL hockey player.
During his pro career from 1983-1997, which included stops in Calgary, Ottawa and Winnipeg, Mr. Kyte made his share of money but this week he confessed much of his wealth has been directed to one of his own children born with a disability — autism.
“They say failing to plan is planning to fail,” jokes Mr. Kyte, who agreed to appear on a conference call sponsored by the Bank of Montreal to promote the bank’s registered disability savings plan (RDSP).
BMO was the first bank to introduce RDSPs in December 2008, and is now first to offer the program to investment advisors through BMO Guardian Funds.
The deadline to take advantage of the government grants and bonds available for RDSPs in 2009 is Dec. 31. The 2008 deadline was extended until March 2, 2009, but there will no such leeway this year.
“When this tool of the RDSP came along it was something that was long overdue,” said Mr. Kyte. “We have been looking and trying to plan for the future. As a parent, when you have young children, you are always worried about the future and what will happen if you are not here. You buy life insurance and so forth. When the children get older, you want them to be contributing members of society. With my son, I hope he can do that, but I don’t know.”
The RDSP, first introduced in the March 2007 federal budget, can be used by parents as a key planning tool for the future. The generosity of the plan is based on certain means tests.
Low-income earners receive a government bond just by registering, provided the recipient of the RDSP is eligible for the disability tax credit. When household net income is under $21,816, the recipient receives a bond of $1,000.
The grants require a contribution and are also income-tested. When annual household income is under $77,664, the recipient of the grant receives $3 for every $1 contributed on the first $500. So, for a contribution of $500, the recipient would get a grant of $1,500. On the next $1,000, it’s $2 for every $1 contributed. Even if household income is above $77,664, the government matches contributions dollar for dollar up to $1,000.
“You have to congratulate the Canadian government for coming out with this and BMO for being the first company to have it. There are a lot of companies that espouse values but BMO follows up its talk with a lot of action,” said Mr. Kyte.
Linda Knight, co-president of BMO Investments, said the bank already has signed up 16,000 Canadians — about 70% of the market.
“We think it’s an amazing program,” said Ms. Knight, adding opening up an advisor channel for customers should add to the number of disabled registering. “This will increase the access to RDSPs. This will give people greater access to opening up and talking about RDSPs.”