Additional Deposit into Locked-In RRSP while residing in US

[rgiustini]

I left Canada in 1999 and am now a US citizen. Prior to my departure, the commuted value of my Canadian employer pension was rolled over into a locked-in RRSP. Each year, I have filed a form 8891 deferring taxes on the earnings in the plan. In 2008 I received notice that my ex-employer had erred in computing the commuted value of my pension, and the error in my favor was distributed to me in two portions:
• The original error amount was directly deposited into my locked-in RRSP
• The accumulated interest for 9 years was sent to me as a check, from which Canadian withholding taxes were deducted
I assume that the interest paid to me is taxable US income, on which I can claim a deduction for Canadian taxes paid. I am unsure how to declare the additional deposit into my RRSP.
• Do need to declare the additional amount as a contribution on form 8891 on line 9?
• If so, do I need to pay taxes on the amount since I am no longer a Canadian resident? Would I therefore be taxed twice, now and when I withdraw the funds?
• Do the additional funds deposited increase the basis value of my account?
• What else do I need to do?
Thank you in advance for your response.

[nelsona]

The increased amount adds basis.

IF you follow 8891, you do NIOT need to report this, since you are instructed to stop before this point, but I would note it.

The interest is pension income, all taxable, with Cdn tax (what % ws it?) to be used asa credit on form 1116.

[rgiustini]

Thank you for the clarification. The Canadian tax was withheld at 25%. Also, on which line of the 8891 would I note the additional contribution? On line 9?

[rgiustini]

Also, I am trying to enter the taxable (pension) income in Turbo Tax. it keeps asking me for a form 1099R. I did not get a form, just a check with infromation about how much Canadian Federal tax was withheld (total withheld was $1,031.41). Where do I enter the taxable pension income? Also, do I claim a tax credid or a deduction?

[nelsona]

If you use turbotax, it specifically asks you about Cdn RRSPs, and takes it from there.

If you are using taxcut, then you need to fake a 1099R, with the gross amount of the withdrawal in US dollars. You just want to make sure you choose a category that doesn't induce the 10% early withdrawl tax.