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April 14, 2015 - Phil Hodgen

RRSPs never reported on FBARs

I swore a mighty oath on a skyscraper of Bibles to never write about RRSPs again, so pretend that this is a post about FBARs and not RRSPs at all.  That is actually semi-accurate because the logic applied here need not only apply to RRSPs.

A gentleman posted a comment on The Last RRSP Post Ever and I thought it would be worth promoting it to blog post territory in order to give it greater visibility:

So what is the semi-nearly-somewhat nearly way  to fix it I have not filed FinCen Form 114 for the past 5 years? I have been in US since 2000 and have been filing 8891 every year since 2004… and didn’t realize I need to include RRSP in FinCen until I found out that 8891 become obsolete :(.

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RRSPs Voluntary Disclosure
January 15, 2015 - Phil Hodgen

The Ultimate “RRSP and the IRS” Essay

RRSPs are Canadian retirement accounts. Until late 2014, they were semi-toxic for U.S. tax purposes when owned by U.S. taxpayers who were unaware of the paperwork requirements south of the border. These problems bedevilled countless Canadians living in the United States, as well as U.S. citizens and green card holders living in Canada.
By administrative fiat in late 2014, the U.S. government blew away the problems it had created–problems that cost countless people money and caused high levels of stress.
August 21, 2013 - Phil Hodgen

New, official, easy fix to unreported RRSP situations

Up to now the way to fix an unreported RRSP problem was by incurring brain damage, spending lots of money, or suffering through terminal uncertainty and fear. Or all of the above.

Your Old Choices

I kid, I kid. Your choices were:

  • ignore the past, and start fresh with reporting your RRSP on your current year tax return and cross your fingers for luck (meaning uncertainty and fear that the IRS would come after you for sins of the past);
  • ask for and receive a private letter ruling allowing you to fix the problem for the prior 6 years (meaning you spent a metric tonne of money, and continued to live in uncertainty and fear of penalties for FBAR violations), or
  • did some creative stuff that we advised many of our clients to do in order to take a position that the past was in fact fully handled (but you still had FBAR violation fears).
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May 15, 2012 - Phil Hodgen

Are RRSP to IRA rollovers allowed?

You cannot do a tax-free rollover of your RRSP into an IRA.

An Individual Retirement Account in the United States is the equivalent of the Registered Retirement Savings Plan in Canada. One idea people have is that if they are going to live in the United States permanently they would like to roll over their RRSP accounts into IRA accounts.

IRAs can only receive rollover contributions from other pension plans which are “qualified plans” as that term is defined in the U.S. tax law. An RRSP is not a “qualified plan” therefore if you put the RRSP money into an IRA you will destroy the tax-exempt status of the IRA for U.S.... continue reading