Beneficiary IRA to Canadian resident...how is it taxed?

[kbar]

I am a US citizen living and working in Canada as a Permanent Resident. I am inheriting a traditional IRA from my mother who recently died in the States. As I understand it, this money will be considered like income in that it will be taxed first in the US and then in Canada, allowing for a Foreign Tax Credit in Canada for the amount paid in US taxes. My question: is this money just added to my other income for the year and then the total taxed accordingly, or is there a special rate of tax that is applied to the IRA money? If the former is the case, then if I put this money into my RRSP (there is plenty of room to contribute), I should not see any Canadian tax on it until I withdraw it. Correct?

[nelsona]

Well, you have US tax to pay, regardless of what you do with the funds in Canada.
It is added to all your other income on your 1040.
It is also all reported on your Cdn return, and the US tax apportioned to this money will be available as a credit on your return.

Since it cannot be considered a transfer, you would have to have contribution room to put it in to an RRSP.

[single]

Can a Canadian resident/citizen transfer an inherited traditional IRA into their RSP?

[nelsona]

No. For a transfer to an RRSP (ie. that doesn't count against your contribution limit) the foreign pension has to be for foreign work that you performed, not inherited.