Best practices for reducing processing errors in RDSP transactions

Below we share the top five processing error issues that create order processing delays when dealing with RDSP transactions. Following the below best practices can help make the process run smoothly.

1. Name changes on the Mackenzie RDSP after it has been registered with the government: Client must update their records with the Social Insurance Registry (SIR) before submitting a request to update the name on an RDSP account. If the name is not updated on SIR first, the request will not be in good order.  

2. RDSP redemptions when clients/advisors use a non-Mackenzie redemption form: Please include an acknowledgement that the “client is aware that grants and bonds may be repaid to government” in the letter or dealer form.

3. Contributions coming from someone other than the account holder: We require a holder consent to non-holder contributions form on every contribution. 

For example: Advisor/client cannot use a non-holder consent form submitted in 2023 for a new contribution at current trade date. 

  • - We would require a non-holder consent form on every contribution in this scenario where two contributions are requested/submitted in 2024. This also applies to one-time PACs.
  • - With recurring PACs, we would only require the holder consent when the recurring PAC is set up or if any changes are made. 

4. RDSP incoming transfers - Signature Guarantee Requirement: Some relinquishing issuers require a signature guarantee stamp on the Holder Consent to Registered Disability Savings Plan (RDSP) Transfer form (EMP5612). Missing signature guarantee stamp may result in delay in transferring the account. The following are RDSP issuers who require signature guarantee (but not limited to):

a. TD, Scotiabank, CIBC, RBC, Credential Asset Managements (Aviso), ATB Securities, Central1 Credit Union and National Bank.

5. Employment and Social Development Canada (ESDC) rejections and refusals: The most common refusals that require resolution are:  

a. SIN rejects: First name, surname and/or date of birth not matching the Social Insurance Registry (SIR) records. 

- Action required: Client/advisor need to confirm SIR records and ensure it matches with Mackenzie records. 

b. Contract registration rejects: Contract registration is rejected related to an RDSP at another financial institution.

- Action required: Client/advisor must initiate a transfer to Mackenzie or request the previous institution file a termination to ESDC if there are no assets.  

c. Beneficiary DTC eligibility not confirmed

- Action Required: Client must contact CRA to resolve DTC issue.

d. Bond request is not/no longer designated to attract bond for the beneficiary OR Last bond payment under this application – new 18+ bond request required.

- Action Required: If beneficiary is between the ages of 19-49, Client must submit a new grant and bond application form EMP5608.

The content of this article (including facts, views, opinions, recommendations, descriptions of or references to, products or securities) is not to be used or construed as investment advice, as an offer to sell or the solicitation of an offer to buy, or an endorsement, recommendation or sponsorship of any entity or security cited. Although we endeavour to ensure its accuracy and completeness, we assume no responsibility for any reliance upon it. This should not be construed to be legal or tax advice, as each client’s situation is different. Please consult your own legal and tax advisor. Market conditions, tax laws and investment factors are subject to change. Individuals should consult with their financial advisor, accountant or legal professional before taking any action based upon the information contained in this article. The Canada Disability Savings Grant (CDSG) and the Canada Disability Savings Bond (CDSB) are provided by the Government of Canada. Eligibility depends on family income levels. Speak to a tax advisor about RDSP’s special rules; any redemptions may require repayment of the CDSG and CDSB. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.