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25 In short, when the RDSP is a primarily government- assisted plan (PGAP), the DAP and the LDAP are generally subject to a maximum, calculated based on the fair market value of the plan and age 80. If the plan's private contributions equal or exceed the government contributions (non- PGAP), only the LDAP is subject to this rule. When the beneficiary reaches the age of 80, 2 the annual LDAP limit will be equal to one third of the assets held in the RDSP at the beginning of the target calendar year, which rapidly depletes the RDSP. There is also a proportional repayment rule. No matter what type of payment is requested, the plan administrator must give the government the lesser of these two amounts: either three times the amount withdrawn or the assistance holdback amount (AHA). The AHA is the sum of all grants and bonds that were paid into the plan in the last ten years. Therefore, it is generally recommended to wait ten years after the final contribution before withdrawing anything from the plan, since the AHA will be equal to zero. Social Solidarity Program In most provinces and territories, RDSP payments have no effect on social programs. In Québec, the Emploi-Québec's Social Solidarity Program (SSP) offers financial assistance to people with severe employment constraints who are incapable of meeting their own basic needs. The basic benefit for an adult with no dependent children is $954 a month, or $11,448 per year, indexed to inflation in Québec. Disability supplements may be added to the allotted financial assistance. This benefit is decreased if the beneficiary's assets exceed a certain threshold 3 or if they receive income, gains or benefits of more than $100 per month. 4 Since the clawback is equal to the amount exceeding this threshold, the effective marginal tax rate (EMTR) on the amount exceeding the $100 threshold is 100%. If a beneficiary receives employment or property income of $150 in one month, their benefit will be reduced by $50 the next month. In general, there is no age limit for receiving SSP benefits, but the beneficiary must first exhaust all other sources of income they can access. 5 For example, they must apply for the Québec Pension Plan (QPP), the OAS and the GIS at the age of eligibility, which is 60 for the QPP and 65 for the OAS and GIS, because that will reduce the amount of the SSP. 6 Generally, SSP benefits cease by age 65, because the amount received from the retirement income plans is too high. Practical Application: Social Solidarity Program and RDSP Since SSP payments may be reduced if a beneficiary has additional income or savings, it is completely reasonable to wonder whether RDSP savings and future payments may affect SSP payments. First of all, the amounts accrued in an RDSP are excluded from the calculation of the SSP reduction. Furthermore, up to $950 a month of the LDAPs from the plan, as well as LDAPs made for a dependent child, are excluded from the calculation. There is no exemption for DAPs. Consequently, to minimize the impact on the SSP, the RDSP LDAP must be no more than $950. Based on the LDAP formula, to avoid exceeding the $950 per month threshold, the maximum value of the plan depends mainly on the beneficiary's age on January 1 of that year. For example, a person who turns 60 this year should not have more than $273,600 in their RDSP on January 1 to avoid affecting the social assistance payment. FEATURE ARTICLE 2 When the RDSP was created in 2007, the life expectancy of disabled people was 80. 3 S. 164, Individual and Family Assistance Act, CQLR, c. A-13.1.1 (hereafter "IFAA"), $208,542 for liquid assets, real property, property and assets received from an estate and a life insurance policy. 4 S. 162, Individual and Family Assistance Regulation, CQLR, c. A-13.1.1, r. 1 (hereafter "IFAR"). 5 S. 63 IFAA. 6 Ibid. 7 Subsec. 138(13) IFAR. 8 When the RDSP was introduced, the amount was $300 per month, and it was increased to $950 in 2014. 9 Subsec. 111(30) IFAR. LDAP = FMV [3 + max (80, age on January 1) – age on January 1] 950 X 12 = 11,400 = FMV [3 + max (80, 59) – 59] FMV = $273,600

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