What happens to an RDSP after age 60?
Contributions stop at the end of the year the beneficiary turns 59, and grants and bonds stop at 49, but the plan keeps paying. Lifetime Disability Assistance Payments must begin by the end of the year the beneficiary turns 60, using a formula designed to stretch the plan to age 83.
Most people I talk to think of an RDSP as a savings plan, and it is, but that description misses the best part. Saving is only the first half of the story. The second half starts around age 60, when decades of small contributions, government grants and bonds, and patient growth finally turn into regular income. I call these the payoff years, and honestly, they are the reason I get so excited when a family opens a plan early.
Why age 60 changes everything
An RDSP has clear milestones built into it, and it helps to know them. Contributions can go in until December 31 of the year the beneficiary turns 59. After that date, no new contributions are allowed, even if you have room left under the lifetime contribution limit of $200,000. The plan does not close, though. It simply shifts from building mode to paying mode.
Government money stops even earlier. Grants and bonds are only paid until December 31 of the year the beneficiary turns 49. Over a lifetime, those grants can reach $70,000 and the bonds can reach $20,000, for a combined maximum of $90,000. That is why the years before 50 matter so much. Once that window closes, it closes for good. If you are still in the building years, our RDSP and Disability Tax Credit guide walks through how those pieces fit together.
How Lifetime Disability Assistance Payments work
Withdrawals from an RDSP are called Disability Assistance Payments. In the later years, the regular, ongoing form of those payments is called Lifetime Disability Assistance Payments, or LDAPs for short. LDAPs must begin no later than the end of the year the beneficiary turns 60. You can start earlier in some situations, but 60 is the deadline the rules set.
What I appreciate about LDAPs is the thinking behind them. The payment amount is set by a formula that considers the value of the plan and the beneficiary's age, and it is designed to spread the money out so the plan lasts to age 83. It is not a free for all, and it is not meant to be. The idea is steady, predictable income over a long stretch of life, a bit like a second paycheque that shows up because of decisions made years earlier. Our guide to RDSP withdrawals and LDAPs explains occasional one time payments too.
What gets taxed, and what does not
This is the part that surprises a lot of families, so let me lay it out plainly. When money comes out of an RDSP, it does not all get treated the same way for tax. The contributions you put in come back out tax free. That makes sense when you think about it, because that money was already taxed before it went into the plan.
The rest is different. The government grants, the bonds, and all the investment growth inside the plan are taxed as income in the year you receive them. So a payment in the payoff years is usually a blend: part tax free return of your own contributions, part taxable income. Knowing that blend matters for planning things like other benefits and credits, and it is a good reason to look at the whole picture each year rather than treating the RDSP in isolation. The tax is not a reason to avoid the plan. The grants, bonds, and growth were never available without it. It is simply part of the deal, and it is a fair one.
Why the 10 year rule matters less after 60
If you have read about RDSPs before, you have probably heard about the 10 year rule, and you may have found it a little intimidating. Here is the simple version. Grants and bonds come with a holdback period. If money is withdrawn too soon after the last grant or bond was paid, some of that government money may have to be repaid. For years, that rule shapes every withdrawal decision.
Now think about the timeline. The last possible government money arrives by age 49, because grants and bonds stop at the end of that year. By age 60, more than 10 years have passed since that last payment for most beneficiaries. The holdback period has generally run its course. That is exactly why I describe the years after 60 as the clean payoff years. The money in the plan is simply there to be used, without the repayment worry hanging over every decision.
Making the payoff years last
Because LDAPs are built to stretch the plan to age 83, the payoff years reward a calm, steady approach. The formula does the heavy lifting on pacing, but your other choices still matter. Things like coordinating RDSP income with other income sources, keeping an eye on the taxable portion each year, and reviewing the plan when life changes can all help the money support you for as long as possible.
It also helps to remember what this income is for. For many people I work with, it is not about getting rich. It is about breathing room. It is rent covered with less stress, better support at home, the freedom to say yes to things that improve daily life. That breathing room is earned.
If you take one thing from this, let it be this: the RDSP rewards patience like few plans I know. The building years can feel slow, and the rules can feel complicated, but the payoff years are where it all comes together. Whether you are 25 and just opening a plan, 45 and catching up on grants, or 59 and looking ahead, understanding what happens after 60 helps you see the full picture. And seeing the full picture is how good, confident decisions get made.
Common questions
When do RDSP contributions have to stop?
Contributions can go in until December 31 of the year the beneficiary turns 59. After that date, no new contributions are allowed, even if room remains under the lifetime contribution limit of $200,000. The plan does not close. It simply shifts from building mode to paying mode, which is the moment the whole plan was designed for.
What are Lifetime Disability Assistance Payments?
Lifetime Disability Assistance Payments, or LDAPs, are the regular payments an RDSP makes to the beneficiary in the payoff years. They must begin by the end of the year the beneficiary turns 60, and the payment formula is designed to make them last to age 83. They turn decades of saving, grants, and bonds into steady income.
What part of an RDSP payment is taxed?
The beneficiary pays tax on the parts that were never taxed going in: the government grants and bonds, and the investment growth. Your own contributions come back tax free, because you already paid tax on that money before it went in. Knowing the split helps you plan withdrawals alongside other income in retirement.
Does the 10 year rule still matter after 60?
Much less. Grants and bonds normally have to stay in the plan for 10 years or some may be repaid if money comes out early. By the time the payoff years begin, the most recent government money has generally aged past that holdback window, so withdrawals are far less likely to trigger a repayment.
See where you stand: the free RDSP readiness checker takes about a minute and shows whether an RDSP belongs in your plan and what the government could add. No signup, and no pressure.
One more check: An RDSP starts with Disability Tax Credit approval, so this check comes first: Confirm your Disability Tax Credit status.
A quick note: this post is educational, not financial advice. For guidance on your own situation, book a free conversation. You don't have to figure this out alone. I'm here to help you through every step.