Last Thursday, Darrell and I finally set up our Registered Disability Savings Plans (RDSP) at the Royal Bank of Canada (RBC) â€“ the second Canadian financial institution offering RDSPs.
We were less than impressed with the RBCâ€™s financial guy. Had time been on our side, we would have waited a while until bank staff was more familiar with this product. And, maybe by then our primary financial institution VanCity would have been offering RDSPs.
But, because March 2, 2009, is the deadline for 2008 contributions and because Darrell had turned 49 â€“ the last eligible year for the federal governmentâ€™s matching funds the Canada Disability Savings Grant and the Canada Disability Savings Bond, we didnâ€™t have the luxury of waiting.
We scraped together what cash we could without leaving ourselves too short. Then we were kicked in the gut when the guy said it wasnâ€™t enough for the minimum for a Guaranteed Interest Certificate (GIC) or mutual funds; our only choice was a savings account at 0.1%. Are you serious? 0.1%?! What is the frigging point?
We need to wait until weâ€™ve saved $1000 to buy a GIC at a slightly higher interest rate. Iâ€™m hoping the federal money will speed up reaching that goal.
After recovering from that kick, we asked what we thought was a fairly straightforward question: what happens to the RDSP if the one of us should die before the funds are completely withdrawn. We thought the guyâ€™s head was going to explode! He had to call yet another colleague.
Unlike Registered Retirement Saving Plans where you can name a beneficiary, we need to do that in our wills. (Add write wills to our never-ending to-do list.)
Apparently, if the will is carried out within the first year after the death, then the beneficiary (named in the will) receives the full amount left in the fund. Otherwise, the federal government claws back the amount it contributed. Huh? (Checking the Canadian Revenue Agency information myself, it appears the federal money must be repaid.)
As for how much we can withdraw starting at age 60, we donâ€™t know. The guy isnâ€™t permitted to discuss that – â€œthe formula is too complicatedâ€. We would need talk to someone in the government. Okay. Next question.
According to the RBC RDSP expert, the money from the federal government should be in our account within a few weeks. As for the British Columbia governmentâ€™s incentive, he didnâ€™t have a clue. He hadnâ€™t heard about it. I was tempted to suggest that he sign up for the RDSP blog updates!
When it came time to depart with our precious cash, he said he couldnâ€™t take it. What?? We are sitting in a bankâ€™s office with umpteen measures of security and he canâ€™t take our cash? Its even real cash, not our baggies of pennies. Are we on candid camera? We had to go to the teller to hand over our money.
We left the Royal Bank not knowing whether we had done the right thing, financially. Would we have been better off to put that money on our credit cards, on our mortgage, or in ING Direct at 2.3%. We donâ€™t know.