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

Recording of a 110-minute CPE webinar with Q&A


Conducted on Tuesday, May 1, 2018

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax advisers with a comprehensive guide to tax reporting requirements and planning opportunities for clients who take distributions from, or have ownership of, Canadian Registered Retirement Savings Plan (RRSP) accounts and similar accounts in other countries. The panel will discuss the U.S. tax law and treaty provisions that exempt RRSPs and RRIFs from the ordinary non-qualified funded plan treatment, detail what events trigger recognition in the U.S., and offer concrete guidance on how to plan for distributions from RRSPs and similar plans in a tax efficient manner. The panel will also show how to report those distributions, including the claiming of U.S. tax credits against Canadian taxes.

Description

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.

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Outline

  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

Benefits

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?

Faculty

Kennedy-C. Edward
C. Edward Kennedy, Jr., CPA, JD
Managing Director
C. Edward Kennedy Jr.

Mr. Kennedy has more than 36 years of experience dealing with a variety of international tax matters, specializing in...  |  Read More

Reed, Max
Max Reed, LLB, BCL

Tax Lawyer
SKL Tax

As a cross-border tax lawyer, Mr. Reed assists clients with tax problems that span the US/Canada border with a...  |  Read More

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