Rebalancing RRSP account while US tax resident

[oneworld]

Hi,

I am wondering if rebalancing funds within RRSP accounts triggers capital gains from IRS perspective. Does anyone have any experience with this?

Thank you.

[nelsona]

No activity within your RRSP triggers capital gains.

You have (or don't have) a certain portion of your RRSP that is considered tax-free. Any withdrawals made in future will be a blend of taxable and non-taxable, based on the proportion of the remaining non-taxable portion and the total value.

This assumes that you have not chosen to pay tax year-by-year on your RRSP in the past.

[nelsona]

Income from your RRSP when yoyu extract it will be considered pension income.

[oneworld]

Thank you for your response, nelsona.

I am not sure about my residency at the time when I will be making withdrawals from this account, so I guess withdrawal specifics will largely depend on this factor.

With regards to rebalancing, it sounds like I am free to rebalance the account as I see fit for the duration of my residency in the US without concern for taxation.

Cheers.

[nelsona]

Correct. But you do need to determine your account book value when you became a USA taxpayer. That is much more easily done now, than when you eventually take funds out. Once this is established, nothing you do internally to the account changes this.