Hi Nelsona,
I just came back from a cross border tax seminar and they were talking about crystallizing the gains in your RRSP before departure.
The presenter mentioned that you do NOT need to actually sell or switch the funds to "bump-up" the ACB. All you need for the IRS is a statement of the fair market value of the account as of your departure date.
I was always under the assumption that a physical switch needed to take place. Is this your understanding as well? Perhaps the procedure has recently changed?
Crystallize RRSP Before Departure
Moderator: Mark T Serbinski CA CPA
Nothing has changed. You could always have used the FMV, However it is never the favorable method of doing it, unless your RRSP has lost money. Others will incorrectly tell you that even switching funds within your account doesn't change the value. Lots of misinformation.
Since the IRS has never addressed the taxable portion of RRSP since they did in Rev Proc 89-45, we really need to go back to that for the definition of "gross investment" in the RRSP for a non-US citizen moving to US:
4.02: For a person who is not a US citizen or a US resident in any years for which contributions were made to the plan, the gross investment in the contract under section 729c)(1)(A) is equal to the LESSER of (a) the FMV of the assets in the plan at the time the beneficiary became a US citizen or resident or (b) the sum of the contributions to the plan plus earnings accrued in the plan at the time the beneficiary became a US citizen or resident. THIS AMOUNT DOES NOT INCLUDE UNREALIZED APPRECIATION IN THE PLAN ASSETS. (CAPS mine)
So, if your FMV is $100K of which $20K is unrealized, uncrystalized gains, you are already in the hook for $20K more than you need have been. Doing nothing does NOT bump-up the ACB. Keeping a statement of the FMV when you moved merely establishes your FMV, not your ACB.
Of course, if it is going to result in sales fees and brokerage fees to bump up your RRSP ACB marginally, then it a decision that needs to be made. But for the typical RRSP holder invested in a family of mutual funds, switches have little or no cost, crystallizing.
Who ran this seminar? had there been a change, we would know about it, wouldn't we?
Since the IRS has never addressed the taxable portion of RRSP since they did in Rev Proc 89-45, we really need to go back to that for the definition of "gross investment" in the RRSP for a non-US citizen moving to US:
4.02: For a person who is not a US citizen or a US resident in any years for which contributions were made to the plan, the gross investment in the contract under section 729c)(1)(A) is equal to the LESSER of (a) the FMV of the assets in the plan at the time the beneficiary became a US citizen or resident or (b) the sum of the contributions to the plan plus earnings accrued in the plan at the time the beneficiary became a US citizen or resident. THIS AMOUNT DOES NOT INCLUDE UNREALIZED APPRECIATION IN THE PLAN ASSETS. (CAPS mine)
So, if your FMV is $100K of which $20K is unrealized, uncrystalized gains, you are already in the hook for $20K more than you need have been. Doing nothing does NOT bump-up the ACB. Keeping a statement of the FMV when you moved merely establishes your FMV, not your ACB.
Of course, if it is going to result in sales fees and brokerage fees to bump up your RRSP ACB marginally, then it a decision that needs to be made. But for the typical RRSP holder invested in a family of mutual funds, switches have little or no cost, crystallizing.
Who ran this seminar? had there been a change, we would know about it, wouldn't we?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
I'm in agreement with you on this. Pretty much everything I came across on this topic mentions a switch needs to take place; hence the term "crystallize".
No she didn't mention anything about not being able to deal with US residents. This was a pretty "high level" presentation that covered a lot of stuff. I'm from a border town, so she was likely just trying to appeal to her audience.
I know there are only a few investment firms that can deal on both sides of the border. Coleman Wealth/Raymond James is one.
No she didn't mention anything about not being able to deal with US residents. This was a pretty "high level" presentation that covered a lot of stuff. I'm from a border town, so she was likely just trying to appeal to her audience.
I know there are only a few investment firms that can deal on both sides of the border. Coleman Wealth/Raymond James is one.