Investing and Saving
Navigating RDSP withdrawals: Turning disability savings into lifetime income
By Linda Lamarche, CFP® 2 June 2026 8 min read
The Registered Disability Savings Plan (RDSP) is a sophisticated long-term savings vehicle designed by the Government of Canada to assist individuals with disabilities and their families in achieving financial security. While much focus is placed on the accumulation phase and leveraging the Canada disability savings grant (CDSG) and Canada disability savings bond (CDSB), the decumulation or withdrawal phase is where the most complex planning is required. This article focuses on RDSP withdrawals—if you want to learn more about setting up and contributing to an RDSP please refer to this article.
Repayment rules and the assistance holdback amount
Since the RDSP is intended for long-term savings, the government requires that any grants or bonds remain in the plan for at least 10 years before they are considered "vested."
One of the most critical factors in RDSP withdrawal planning is the assistance holdback amount (AHA). The AHA is the total amount of grants and bonds paid into the RDSP in the 10-year period preceding a withdrawal. If any amount is withdrawn from the plan while an AHA exists, a proportional repayment is triggered.
The 3:1 repayment ratio
For every $1 withdrawn from an RDSP, the plan holder must repay $3 of the grants and bonds that make up the AHA, up to the total AHA balance. In other words, when a withdrawal is made, if there have been grants and bonds paid into the plan in the last 10 years, the lesser of the following must be paid back to the government:
- 3X the withdrawal, or
- The amount of grants and bonds received in the previous 10 years
A payment cannot be made from an RDSP if the value of the RDSP, after the payment, will be less than the AHA.
The repayment rule no longer applies at age 60 when the required lifetime payments start, since grants and bonds are only paid into the plan until December 31 of the year the beneficiary turns 49 and a period of 10 years will have passed since any government incentives were paid into the plan.
Types of withdrawals from your RDSP
Withdrawals from an RDSP are referred to as disability assistance payments. At the latest, regular lifetime payments from an RDSP must begin by the end of the year the beneficiary turns age 60. Withdrawals are classified as either:
- Disability Assistance Payments (DAPs) - These are one-time payments that can be requested at any time.
- Lifetime Disability Assistance Payments (LDAPs) - These are recurring payments that are based on a pre-calculated formula. These payments can start at any time, but must begin by the end of the year the beneficiary turns age 60. Once started, they are payable at least annually, and continue according to a defined payment schedule.
LDAP payment schedule:
Value of the RDSP at the beginning of the year divided by the number of years before the beneficiary turns 83 until the year the beneficiary turns 81, and three thereafter:
| Age at end of year | Value of RDSP divided by this factor |
|---|---|
| 60 | 24 |
| 61 | 23 |
| 62 | 22 |
| 63 | 21 |
| 64 | 20 |
| 65 | 19 |
| 66 | 18 |
| 67 | 17 |
| 68 | 16 |
| 69 | 15 |
| 70 | 14 |
| 71 | 13 |
| 72 | 12 |
| 73 | 11 |
| 74 | 10 |
| 75 | 9 |
| 76 | 8 |
| 77 | 7 |
| 78 | 6 |
| 79 | 5 |
| 80 | 4 |
| 81+ | 3 |
Even if there is no AHA, there are maximums that may apply to the payment amounts. The maximum depends on whether the plan is considered a primarily government-assisted plan (PGAP plan).
PGAP vs. non-PGAP
An RDSP is either classified as a PGAP or a non-PGAP. A plan is considered a PGAP in a given year if the total government grants and bonds paid into the plan exceed the total contributions. This designation is important because it imposes a maximum on how much can be withdrawn. In a PGAP, the total DAPs and LDAPs for the year cannot exceed the greater of the LDAP formula or 10% of the value of the RDSP.
Payment minimums and maximums: General calculations of payment minimums and maximums are provided below:1
| Non-PGAP plan | PGAP plan | |||||
|---|---|---|---|---|---|---|
| Minimum | Maximum | Minimum | Maximum | |||
| DAP | Combined with LDAP | No maximum | DAP | Combined with LDAP | Combined with LDAP | |
| LDAP | Value of the RDSP at the beginning of the year divided by # of years before beneficiary turns 83, until the year the beneficiary turns 81, and three thereafter | LDAP | Value of the RDSP at the beginning of the year divided by # of years before beneficiary turns 83, until the year the beneficiary turns 81, and three thereafter | |||
| DAP + LDAP | Value of the RDSP at the beginning of the year divided by # of years before beneficiary turns 83, until the year the beneficiary turns 81, and three thereafter | No maximum | DAP +LDAP | Value of the RDSP at the beginning of the year divided by # of years before beneficiary turns 83, until the year the beneficiary turns 81, and three thereafter | Greater of LDAP amount or 10% of the value of the RDSP at the beginning of the year | |
Payments may be requested by the holder at any time, or by a non-holder beneficiary without the holder’s consent if the beneficiary is between the age of 27 and 58 inclusively and the RDSP is considered a PGAP.
Although the RDSP allows access to funds at any time, if any government grants or bonds were contributed within the last 10 years, the AHA repayment rule would be triggered. As a result, holders must strategically plan the RDSP for long-term savings.
Taxation of withdrawals
RDSP withdrawals are not taxed in their entirety. Instead, every payment is a blend of taxable and non-taxable components.
- Non-taxable portion: This represents the original contributions made by the holder or family. Because these were made with after-tax dollars, they are returned tax-free.
- Taxable portion: This consists of the grants and bonds, any amount received into the plan from a rollover and all investment growth (dividends, interest, and capital gains). Issuers will report this income in box 131 of a T4A slip. This amount is to be reported on line 12500 of the beneficiary’s income tax and benefit return for the year the payment was made.
The taxable income from an RDSP is excluded from income when calculating federal income-tested benefits such as the GST/HST credit, the Canada Child Benefit (CCB), Old Age Security (OAS) clawback and the Guaranteed Income Supplement (GIS).
Withholding tax
The taxable portion of the RDSP withdrawal will have to be reported on your income tax and benefit return, however, the financial institution will only apply withholding tax on your RDSP withdrawal when the taxable portion exceeds the combined amount of two non-refundable tax credits: the federal basic personal amount and the federal disability amount. For 2026, the credits are as follows:
| 2026 | |
|---|---|
| Federal basic personal amount | $16,452 |
| Federal disability amount | $10,341 |
| Total | $26,793 |
For 2026, no withholding tax would be applied if the total taxable portion of LDAPs combined with the taxable portion of DAPs stays below $26,793. Once taxable amounts have been withdrawn that exceed that threshold, withholding tax will be applied.
The withholding tax is applied to the excess is based on the following tiers:
- 10% for amounts up to and including $5,000.
- 20% for amounts more than $5,000 and up to $15,000.
- 30% for amounts more than $15,000.
The applicable withholding tax rate will be applied to:
- Total taxable portion of all LDAPs expected to be paid in the year.
- Taxable portion of each individual DAP when requested.
Additional considerations
Successful RDSP management requires understanding the rules for withdrawals, balancing immediate liquidity needs against the high cost of the repayment of government incentives and managing the maximum withdrawal limits for PGAP plans. There are options available to mitigate these constraints.
Specified Disability Savings Plan
If the beneficiary of an RDSP is expected to have a shortened life expectancy, the holder can apply to have the RDSP classified as a specified disability savings plan (SDSP). Withdrawals from an SDSP will not trigger a repayment of grants or bonds.
A licensed medical practitioner must certify in writing that the beneficiary is not expected to live for more than five years. The holder then makes the election and provides the election along with the medical certification to the RDSP issuer. The issuer will inform Employment and Social Development Canada (ESDC) of the SDSP election. Once the election is made, the plan is no longer eligible for contributions, and is not able to attract any new grant or bond money.
Managing PGAP status
If a plan is a PGAP, the 10% maximum withdrawal can be restrictive. It may be worth making additional contributions to move a plan out of PGAP status. Ensuring the private contributions outweigh the government incentives will provide greater withdrawal flexibility in future years.
The power of patience
RDSP beneficiaries are not eligible for grants and bonds after age 49 and each passing year reduces the AHA. If you can wait until age 60 to begin withdrawals, the repayment rule disappears entirely. This allows the beneficiary to access the RDSP funds without any repayment of grants or bonds.
Final thoughts
The RDSP is a highly effective tool for securing the long-term financial future of Canadians with disabilities and their families. This powerful vehicle combines tax-sheltered investment growth with substantial government incentives, making it possible for individuals with disabilities to build wealth that may otherwise be out of reach.
Achieving success with an RDSP requires strategic planning, not only to maximize both contributions and government incentives but also to navigate the complex rules for the decumulation or withdrawal phase and avoid penalties. Think of the RDSP as a marathon, not a sprint. By understanding these rules now, you are safeguarding your future self and ensuring the government's financial support remains firmly in your hands.
References
1 Different minimum and maximum amounts may apply if payments are made:
- From an RDSP before the end of the year in which the beneficiary turns 59
- From a specified disability savings plan (SDSP)
- From an RDSP in a specified year (the calendar year the medical practitioner certifies the beneficiary is not expected to live longer than five years and that certification is provided to the RDSP issuer).
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