Mar 26, 2026
Canada’s registered savings accounts are often praised as powerful tools for building wealth. But for one Toronto family, a savings plan meant to secure their son’s future has become a source of unexpected stress.
Fourteen year-old Sebastian Correa lives with a number of medical conditions and his family chose to open a Registered Disability Savings Plan (RDSP) to help save for his future, CTV News reported (1). Correa currently needs to be fed via a tube, is non-verbal and has autism, his mother Sandra Martinez told the news outlet.
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Martinez was told opening an RDSP would be a prudent financial move for their son’s future, as the account allows them to save funds — and receive additional grants from the government — for their son to access when he is older. Martinez was allegedly told by her bank they could make withdrawals from the account after 30 years. Now that the family has accumulated around $100,000 in the account, they recently found out that isn’t the case.
Instead, the family may have to wait until Correa is 60 so they can withdraw funds without losing portions of the government grants. But his parents are concerned they might not be around to facilitate that distribution — or that Correa will even make it to 60 given his conditions.
“For us, that’s almost impossible,” Martinez told CTV. “We do not know what his life expectancy will be. Unfortunately, I don’t think he will make it to 60 years old.”
“If we were told at the beginning when we sat down with an advisor at the bank, we would have never had done it,” Martinez added.
How RDSPs work in practice
An RDSP is a long-term savings account designed to help Canadians with disabilities build financial security. Introduced in 2008 (2), the program allows Canadians approved for the Disability Tax Credit (DTC) to contribute money themselves or receive it as beneficiaries (3), which grows tax-deferred while also receiving significant government support.
The idea behind the program is simple: People with disabilities often face higher living costs and lower lifetime earnings, so the government encourages families to save by adding contributions to the account.
Two programs provide that support. The Canada Disability Savings Grant (CDSG) matches contributions — sometimes up to three dollars for every dollar saved — while the Canada Disability Savings Bond (CDSB) provides deposits for lower-income families even if they cannot contribute themselves. The CDSG has a lifetime maximum of $70,000, or $3,500 per year, and the CDSB has a lifetime cap of $20,000 or $1,000 per year (4).
Over time, these incentives can significantly increase the value of an RDSP.
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But the accounts are designed for long-term savings, and that’s where things can get complicated.
If money is withdrawn while government grants or bonds deposited within the last 10 years remain in the account, some of those government contributions will be repaid. This rule — known as the 10-year assistance holdback amount rule — can make early withdrawals costly. This rule does not apply if the beneficiary of the account turns 60, or if they have a reduced life expectancy of five years or less, though certain conditions may apply (5).
In practical terms, withdrawing $1 can trigger the repayment of up to $3 in government contributions, until all grants and bonds paid into the account over the previous decade have been returned. For example, a family withdrawing $5,000 from an RDSP could end up repaying up to $15,000 in government support.
For families who suddenly need access to the money like Correa’s parents, that structure can turn what looks like a sizeable savings account into a much smaller nest egg — especially when they need money the most. And experts have called for changes because of it.
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Calls for adjustments
According to the Canada Disability Savings Program’s 2023 Annual Report (6), almost 35% of all eligible Canadians have opened an RDSP. This is an arguably low ratio considering the major benefits qualified Canadians receive.
Some experts see this low use rate as a sign that RDSPs are too complex for the average Canadian. In a recent issue of the Canadian Tax Foundation’s publication Perspectives on Tax Law & Policy (7), CIBC Private Wealth staff published a piece calling for measures to improve the RDSP, citing the plan as being “extremely complex.”
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To help increase usage of the RDSP across Canada, the authors noted four areas that could be improved, one of which was more flexibility surrounding government grant repayments — a challenge Correa’s family is facing. The authors called for either shortening the 10-year holdback rule to five years or removing it entirely once the beneficiary reaches 50 years of age to allow for them to access the funds when they need it.
“Here again, the rules are unduly inflexible and may undermine the plan’s core purpose of assisting people with disabilities,” they write.
Additional points of reform to the program include creating an auto-enrolment process for qualified families/individuals and relaxing the withdrawal rules regarding age limits to create greater flexibility for beneficiaries.
Alternatives for families with disabled children
Hearing about strict rules regarding withdrawals might make many Canadians reconsider using an RDSP. There are two alternatives that parents of disabled children can use to help save for their future and don’t have the restrictive assistance holdback amount.
The simplest is to open a TFSA for a child. This allows the parents to save for their children’s future tax-free, subject to certain contribution limits, and withdraw funds at any time without penalty (8). However, this account does not allow disabled beneficiaries or holders to receive grants from the government like an RDSP does.
Another option, though much more complex, is to create a fully discretionary trust called a Henson Trust (9). Parents or other family members can create a trust for a disabled child that allows the trustees to withdraw funds at any time, in contrast to an RDSP. While funds utilized in this way are taxed, if the beneficiary of the trust qualifies for the DTC, income generated by the trust may be taxed at a lower rate.
Still, none of these alternatives offer the same level of government support as an RDSP. For families that care for children like Correa, that means navigating a difficult trade-off: A savings plan that can grow significantly with government help, but one that can be far harder to access when they need the money most.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
CTV News (1); Employment and Social Development Canada (2, 3, 4, 5, 6) Canadian Tax Foundation (7); Government of Canada (8); Mackenzie Investments (9);
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Brett Surbey is a corporate paralegal with KMSC Law LLP and freelance writer who has written for Yahoo Finance Canada, Success Magazine, Publishers Weekly, U.S. News & World Report, Forbes Advisor and multiple academic journals. He and his family live in northern Alberta, Canada.
