Does anyone have expertise in this area and give me some guidance?
The Canadian RDSP (Registered Disability Savings Plan) is modelled after the RESP (Registered Education Savings Plan).
Are these considered Grantor Trusts by the IRS? I am the Holder of an RDSP for my son, who will be the Beneficiary and can start drawing when he is 60 years of age. How does the IRS treat Bonds and Grants from the Government? Exactly how should these be reported? The IRS may make the Beneficiaries of these Plans (set up for my son to act as a pension plan for him) Second Class Canadian Citizens as, I think, the same benefits are negated for them compared to other Canadian Beneficiaries. Correct?
My son was born in Canada (of US citizens in Canada before they became Canadian citizens), raised as a Canadian only, never lived in the US. He was never registered as a US citizen. I am told by the US Consulate that I cannot renounce my son's citizenship on his behalf even with a court order even though he does not have the perceptual capacity to realize the consequences of such a decision -- it would only upset and confuse him.
Summary U.S. Tax Compliance Foreign Grantor Trusts (Foreign Gifts)
When a U.S. person receives a foreign gift ([b]WOULD THIS BE A CANADIAN BOND OR GRANT?[/b]), or establishes a foreign grantor trust ([b]IS THE RDSP A FOREIGN GRANTOR TRUST?[/b]), the following U.S. tax compliance is required:
1. Form 56 (upon trust formation)
2. Form SS-4 (for trust formation)
3. Form 3520 (on both trust formation within 90 days of the reportable event, or annually upon receipt of foreign gifts)
4. Form 3520-A (annually)
5. Form 709 (Gift Tax Returns) for transfer of Assets to fund a Foreign Trust
A copy of both Form 3520 and 3520-A is to be attached to the U.S. person’s tax return, with separate copies filed with the IRS in Ogden, Utah.
Registered Disability Savings Plan (RDSP)
Moderator: Mark T Serbinski CA CPA
Registered Disability Savings Plan (RDSP)
Here is the answer I recieved from the tax department at Makenzie Financial. They are the first, but not the last, non-bank to offer RDSP's.
I hope this helps.
Ken.
As far as we know, the IRS will most likely consider RDSP’s a foreign trust requiring the standard reporting requirements (i.e. IRS form 3520/3520A and quite likely IRS form TD F 90-22.1 under the FBAR requirements) for U.S. citizens and residents that are RDSP plan holders. Unlike RRSP’s/RRIF’s held by U.S. citizens that are afforded a tax deferral under Article XVIII(7) of the Treaty, RDSP’s are not yet eligible plans for such tax deferrals for U.S. citizens or residents. As a result, RDSP plan holders and beneficiaries that are U.S. citizens or residents will not benefit from the tax deferral currently enjoyed by Canadian RDSP plan holders.
More importantly, the U.S. reporting requirement in itself may make it too difficult for U.S. citizens to be plan holders or beneficiaries of RDSP’s. Adding the RDSP to the agenda for Canada-U.S. Income Tax Convention discussions is critical for RDSP beneficiaries who are American citizens.
Hope this helps. If you require any further assistance, please let me know.
Regards,
Carol
Carol E. Bezaire, CFP, TEP, CLU
Vice-President, Tax & Estate Planning
Mackenzie Financial Corporation
180 Queen St. W., 16th Floor
Toronto, Ontario M5V 3K1
I hope this helps.
Ken.
As far as we know, the IRS will most likely consider RDSP’s a foreign trust requiring the standard reporting requirements (i.e. IRS form 3520/3520A and quite likely IRS form TD F 90-22.1 under the FBAR requirements) for U.S. citizens and residents that are RDSP plan holders. Unlike RRSP’s/RRIF’s held by U.S. citizens that are afforded a tax deferral under Article XVIII(7) of the Treaty, RDSP’s are not yet eligible plans for such tax deferrals for U.S. citizens or residents. As a result, RDSP plan holders and beneficiaries that are U.S. citizens or residents will not benefit from the tax deferral currently enjoyed by Canadian RDSP plan holders.
More importantly, the U.S. reporting requirement in itself may make it too difficult for U.S. citizens to be plan holders or beneficiaries of RDSP’s. Adding the RDSP to the agenda for Canada-U.S. Income Tax Convention discussions is critical for RDSP beneficiaries who are American citizens.
Hope this helps. If you require any further assistance, please let me know.
Regards,
Carol
Carol E. Bezaire, CFP, TEP, CLU
Vice-President, Tax & Estate Planning
Mackenzie Financial Corporation
180 Queen St. W., 16th Floor
Toronto, Ontario M5V 3K1
Ken White EPC
Guelph Financial
Investment Planning Counsel
1027 Gordon Street, Suite 10
Guelph, On. N1G 4X1
519-821-5853 ph
519-822-0088 fax
Kwhite007 skype
Guelph Financial
Investment Planning Counsel
1027 Gordon Street, Suite 10
Guelph, On. N1G 4X1
519-821-5853 ph
519-822-0088 fax
Kwhite007 skype
-
calgary411
- Posts: 2
- Joined: Tue Jan 03, 2012 6:51 pm
Re: Registered Disability Savings Plan (RDSP)
[quote="Ken White"]Here is the answer I recieved from the tax department at Makenzie Financial. They are the first, but not the last, non-bank to offer RDSP's.
I hope this helps.
Ken.
As far as we know, the IRS will most likely consider RDSP’s a foreign trust requiring the standard reporting requirements (i.e. IRS form 3520/3520A and quite likely IRS form TD F 90-22.1 under the FBAR requirements) for U.S. citizens and residents that are RDSP plan holders. Unlike RRSP’s/RRIF’s held by U.S. citizens that are afforded a tax deferral under Article XVIII(7) of the Treaty, RDSP’s are not yet eligible plans for such tax deferrals for U.S. citizens or residents. As a result, RDSP plan holders and beneficiaries that are U.S. citizens or residents will not benefit from the tax deferral currently enjoyed by Canadian RDSP plan holders.
More importantly, the U.S. reporting requirement in itself may make it too difficult for U.S. citizens to be plan holders or beneficiaries of RDSP’s. Adding the RDSP to the agenda for Canada-U.S. Income Tax Convention discussions is critical for RDSP beneficiaries who are American citizens.
Hope this helps. If you require any further assistance, please let me know.
Regards,
Carol
Carol E. Bezaire, CFP, TEP, CLU
Vice-President, Tax & Estate Planning
Mackenzie Financial Corporation
180 Queen St. W., 16th Floor
Toronto, Ontario M5V 3K1[/quote]
Thanks very much for passing this on. It is more than unfortunate that this is not a priority with the Finance Minister of Canada. Discrimination for a population that needs advocacy.
I hope this helps.
Ken.
As far as we know, the IRS will most likely consider RDSP’s a foreign trust requiring the standard reporting requirements (i.e. IRS form 3520/3520A and quite likely IRS form TD F 90-22.1 under the FBAR requirements) for U.S. citizens and residents that are RDSP plan holders. Unlike RRSP’s/RRIF’s held by U.S. citizens that are afforded a tax deferral under Article XVIII(7) of the Treaty, RDSP’s are not yet eligible plans for such tax deferrals for U.S. citizens or residents. As a result, RDSP plan holders and beneficiaries that are U.S. citizens or residents will not benefit from the tax deferral currently enjoyed by Canadian RDSP plan holders.
More importantly, the U.S. reporting requirement in itself may make it too difficult for U.S. citizens to be plan holders or beneficiaries of RDSP’s. Adding the RDSP to the agenda for Canada-U.S. Income Tax Convention discussions is critical for RDSP beneficiaries who are American citizens.
Hope this helps. If you require any further assistance, please let me know.
Regards,
Carol
Carol E. Bezaire, CFP, TEP, CLU
Vice-President, Tax & Estate Planning
Mackenzie Financial Corporation
180 Queen St. W., 16th Floor
Toronto, Ontario M5V 3K1[/quote]
Thanks very much for passing this on. It is more than unfortunate that this is not a priority with the Finance Minister of Canada. Discrimination for a population that needs advocacy.