Canadian RRSPs, RRIFs and Other Foreign Funded Retirement Plans: Tax Planning and Reporting for 402(b) and Other Funded Plans

Canadian RRSPs, RRIFs, as well as other similar funded foreign retirement plans (such as Australia’s Superannuation Fund and various Provident Funds) often present tax reporting and planning challenges for U.S. taxpayers. In many instances, these accounts, while generally receiving deferral treatment on contributed amounts in their host countries, do not qualify for beneficial U.S. tax treatment because they do not meet the requirements of “qualified plans” that receive U.S. deferral of contributions.

Certain non-qualifying funded plans (referred to as employee’s trusts) are governed by IRC Section 402(b), rather than Section 409A, for U.S. tax purposes. Under 402(b), employee’s trusts which are not exempt from tax under IRC Section 501(a) are subject to current tax on employer contributions made to these plans, and depending on whether the employee is considered a “highly compensated employee,” the earnings and accretions on these plans may also be currently taxable.

However, employer contributions and current earnings from plans which do not qualify as an employee’s trust, such as Canada’s RRSP and RRIF plans, are generally subject to current taxation. However, the U.S.-Canada Income and Capital Tax Treaty provides for deferral of RRSP and RRIF income accrued but not distributed to the beneficiaries.

Recent IRS revenue procedures have allowed taxpayers to adopt deferral as a default position under certain circumstances for certain of these Canadian plans but have not eliminated information filing requirements. Tax advisers must know the circumstances under which treaty elections must be made to avoid costly tax penalties for failure to file required information returns.

Listen as our experienced panel provides comprehensive and practical guidance on the tax reporting requirements and planning opportunities for U.S. taxpayers owning RRSPs, RRIFs and similar foreign retirement accounts.

1. Definition of RRSPs, RRIFs and similar funded plans
2. Tax treatment and issues under IRC 402(b)
3. Treaty provisions and available elections
4. Distribution planning
5. Other countries funded plans and 402(b) treatment
6. Required filings for account ownership
7. Reporting distributions and claiming U.S. foreign tax credits under IRC 901

The panel will discuss these and other critical issues:

• U.S. treatment of contributions to foreign funded plans where those contributions are deferred in the plan’s resident country
• What treaty provisions and elections are available to equalize the tax treatment of contributions and distributions?
• What planning opportunities arise in the context of distributions from the foreign plans?
• What reporting is required for owners of Canadian RRSP/RRIF (and other similar) plan accounts?

Learning Objectives

After completing this course, you will be able to:

• Identify U.S. tax reporting requirements for U.S. taxpayers owning Canadian RRSP accounts and similar foreign based retirement plans
• Determine how to report contributions to and distributions from these types of foreign funded trust accounts
• Identify planning opportunities that arise under treaty provisions
• Discern how to plot out distribution strategies for impacted clients

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of foreign information reporting requirements, including FATCA and FinCEN Form 114; familiarity with foreign income sourcing rules and tax treaty provisions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).