In transfer a component GIC from Bank 'A' to Bank 'B', Bank 'A' dinged me for CDN$ 100 as a "Transfer Fee", which Bank 'B' did not (yet) compensate me for. Two questions:
1) On Form 8891, in which the Article XVIII election was NOT taken, how does one account for the Transfer Fee at Line 9, contributions to the plan?
Recalling that Bank 'B' has not (yet) compensated me for the CDN$ 100 Transfer Fee, do I treat the entire amount that left the RRSP at Bank 'A' as a negative contribution at Line 9, or do I use X - 100 for the negative contributio and claim the 100 fee as a Miscellaneous Deduction on Schedule B?
2) If, in a later year, Bank 'B' were to compensate me the CDN$ 100 transfer fee by putting it into the RRSP at that bank, would I then claim that as a contribution at Line 9 for that year?
A search of your web forum with the search string "rrsp AND transfer AND fee" found nothing on this topic, only posts relating to withdrawals.
Form 8891: How to handle bank RRSP transfer fee
Moderator: Mark T Serbinski CA CPA
Thanks, nelsona. That's super, and by treating the CDN$ 100 Transfer Fee as a non-event, it actually reduces my interest income a wee bit, since I had been computing the value for Line 10a, "Interest income", as this:
Year End Balance - Year Begin Balance - Contributions + Transfers Out + Transfer Fees
So, for example, with this data:
Year Begin Balance: CDN$ 5,000.00
Year End Balance : CDN$ 5,500.00
Contributions : CDN$ 40.00
Transfers Out : CDN$ 700.00
Transfer Fees : CDN$ 100.00
My interest income would (have) been 5500 - 5000 - 40 + 700 + 100 = 1260
but by ignoring the transfer fee, my interest is down to 1160, instead.
Year End Balance - Year Begin Balance - Contributions + Transfers Out + Transfer Fees
So, for example, with this data:
Year Begin Balance: CDN$ 5,000.00
Year End Balance : CDN$ 5,500.00
Contributions : CDN$ 40.00
Transfers Out : CDN$ 700.00
Transfer Fees : CDN$ 100.00
My interest income would (have) been 5500 - 5000 - 40 + 700 + 100 = 1260
but by ignoring the transfer fee, my interest is down to 1160, instead.
You should be calculating interest by the interst you are being paid, no other way.
Year-end balances etc go towrds cap gains (ie. currency fluctuations).
Interest is interest. currency fluctuations is unrealized cap gains.
Year-end balances etc go towrds cap gains (ie. currency fluctuations).
Interest is interest. currency fluctuations is unrealized cap gains.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Yeah, that's what I would prefer to do _ get an entry on my bank statement at the end of each reporting period, every six months in the case of the aforementioned Bank 'A', that says: "Oki-doki, buddy, your RRSP got this much interest this year: CDN$ X". Unfortunately, as of this writing, my RRSP at Bank 'A' consists of nine individual GICs, each with a different maturity date ranging from 2011 to 2015 and with different interest rates.
What Bank 'A' does, instead of spelling out how much interest has accrued, is simply to show me the opening and closing values of the RRSP along with the dates and amounts of any contributions or transfers. And since, in the past, in the absence of any transfers, the closing value always exceeded the sum of the opening value and contributions, I figured that the bank was including accrued interest along the way in the various closing values.
That's why I was computing the interest for Line 10a rather than transcribing it from a bank statement, there being no such figure on the bank statements. It's an easy enough calculation, or had been until I opened a second RRSP at another bank, Bank 'B', and started transferring funds to it from the RRSP at Bank 'A'. Then I hit the Transfer Fee thing.
My wife told me just to take all the money out, pay all kinds of penalties and taxes, and stuff the rest in a sock. There certainly would be less paperwork once that was done, I figure. Maybe. Unless there's a U.S. Form 5689.375a(2), "U.S. Information Return for Beneficiaries of Certain Canadian Socks". Maybe I just should give the money to my bookie, instead? Nope, with my bad luck, I just might win big on the 3rd race at Pimlico. Then where would I be?
What Bank 'A' does, instead of spelling out how much interest has accrued, is simply to show me the opening and closing values of the RRSP along with the dates and amounts of any contributions or transfers. And since, in the past, in the absence of any transfers, the closing value always exceeded the sum of the opening value and contributions, I figured that the bank was including accrued interest along the way in the various closing values.
That's why I was computing the interest for Line 10a rather than transcribing it from a bank statement, there being no such figure on the bank statements. It's an easy enough calculation, or had been until I opened a second RRSP at another bank, Bank 'B', and started transferring funds to it from the RRSP at Bank 'A'. Then I hit the Transfer Fee thing.
My wife told me just to take all the money out, pay all kinds of penalties and taxes, and stuff the rest in a sock. There certainly would be less paperwork once that was done, I figure. Maybe. Unless there's a U.S. Form 5689.375a(2), "U.S. Information Return for Beneficiaries of Certain Canadian Socks". Maybe I just should give the money to my bookie, instead? Nope, with my bad luck, I just might win big on the 3rd race at Pimlico. Then where would I be?
I guess that was OK. YOu do realize that for US tax purposes, you don't have to report interst until it is actually paid to you, unlike canada. I would have simply not reported interest until the GIC matured.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Hi, Nelsona... I see your point, now. Thanks. For my non-RRSP GICs, I do just what you suggest: I declare them on my U.S. taxes when I get the T5 interest statement from the bank after the GIC matures.
It's still OK, though, in terms of the GICs in the RRSPs and the Form 8891, Line 10a, situation to report accrued interest, right?
In general, and off topic, this is one fantastic web forum. Thanks for your great posts!
It's still OK, though, in terms of the GICs in the RRSPs and the Form 8891, Line 10a, situation to report accrued interest, right?
In general, and off topic, this is one fantastic web forum. Thanks for your great posts!
Hi, Nelsona... I've always used the accrual method, ever since doing my first RRSP declaration on my U.S. taxes a lot of years ago, via the 1040X. I discovered waaaayyyy back, that, unlike Canada, which told me that they only wanted to know about my U.S. IRA's when I started to withdraw the funds, the U.S. requires its citizens to report yearly, most recently via the Form 8891. Holy Gee Whillikers! I had to go back and do about 10 years of 1040X's, since I had not declared them over that earlier time frame. That little exercise took me about four months, and I think my wife was thinking of having me involuntarily committed. It was during that time that I learned about the difference between accrued and paid interest, used the former then and have stayed with it ever since.
Re: Early withdrawal... No problem there; I've never taken any funds out of my RRSP, only transferred between two RRSPs. My wife, bless her, is taking me over to meet the bank's financial advisor and will get the RRSPs converted to RIFs, which action, no doubt, will open two or three other cans of worms.
Re: Line 30 of Form 1040... I don't think that that applies in my case, since I have never taken a withdrawal from my RRSP, early or otherwise. All that I've done is transfer component GICs from the RRSP at Bank 'A' to another RRSP at Bank 'B' when the component GIC reached maturity, rather than simply renewing the GIC within the RRSP at Bank 'A'. Am I wrong in my belief that the IRS treats withdrawals and transfers differently?