US/CDN citizen with RRIF and LIF

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artistic95
Posts: 27
Joined: Wed Sep 26, 2012 12:27 pm
Location: Lake Wales, Florida,33859

US/CDN citizen with RRIF and LIF

Post by artistic95 »

I am a US resident citizen and also a Canadian citizen with RRIF and LIF at TD WATERHOUSE. which were created from my working days in Canada.
I have been withdrawing my annual monthly minimum requirements. And having them sent to me in US after a 15% withholding by Canada.
Question #1--How much money can be withdrawn beyond minimum to still maintain the 15% withhoilding rate .I do not file Canadian tax
returns so all withholding is simply lost and condidered Canadian taxes.
Question # 2--What happens to these retirement accounts when I die? I have assigned beneficiaries both CDN and US but don't know tax consequences of death.

Each of these accounts currently prox $350,000.

Thank you for your input
Artistic 95
Thanks, Artistic95
nelsona
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Post by nelsona »

1. You are allowed to withdraw the larger of: 10% of the year-beginning value, or twice the minimum, and still retain the 15% withholding rate.
2. For Canada, unless transferred to your spouse, they will be collapsed and taxed at death. Where the proceeds go from there doesn't matter.
For US, the pre-tax amounts will be part of your estate, and subject to estate tax depending on who inherits the money, with the Cdn taxes mentioned being eligible for credit against any US estate tax.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
mikie
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Joined: Thu Jan 07, 2016 1:08 pm

Post by mikie »

Related question. Dual national, US resident here. I have a Canada Life RRIF, about $80K, and Manulife RRIF, about $120K, having the required minimum monthly disbursement from each deposited to my non registered checking account. CRA is withholding 15%. If I transfer the entire Canadian Life RRIF to the Manulife RRIF, and thus close the Canada Life RRIF, and take the new required minimum monthly disbursement from the now $200K Manulife RRIF, will withholding remain at 15%? Also, what if any implications will the transfer to Manulife have re the IRS?
nelsona
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Post by nelsona »

Transfers between registered accounts are non-events for CRA and IRS purposes.

Manulife will calculate a new minimum. The withholding will remain at 15%
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
artistic95
Posts: 27
Joined: Wed Sep 26, 2012 12:27 pm
Location: Lake Wales, Florida,33859

Post by artistic95 »

Nelsona, thank you.
I have designated beneficiaries on both accounts, one being Canadian resident, US citizen and the other being split between above mentioned beneficiary and a US citizen resident.

What Canadian tax factor withholding rate is used upon death by the Canadian government when these two accounts are collapsed by the beneficiaries upon my deathe? Is it still 15% or more? I am dual citizen (CDN and US) but resident of US filing IS tax returns and no Canadian tax returns.

Should I consider increasing my monthly withdrawals to more than the minimum as long as I maintain the 15% withholding rate to reduce impact upon death>>

thank you so much
Artistic95
Thanks, Artistic95
artistic95
Posts: 27
Joined: Wed Sep 26, 2012 12:27 pm
Location: Lake Wales, Florida,33859

Nelsona, thank you

Post by artistic95 »

[quote="nelsona"]1. You are allowed to withdraw the larger of: 10% of the year-beginning value, or twice the minimum, and still retain the 15% withholding rate.
2. For Canada, unless transferred to your spouse, they will be collapsed and taxed at death. Where the proceeds go from there doesn't matter.
For US, the pre-tax amounts will be part of your estate, and subject to estate tax depending on who inherits the money, with the Cdn taxes mentioned being eligible for credit against any US estate tax.[/quote]
Nelsona, thank you !!r
I have designated beneficiaries upon death for both accounts, one being aa Canadian resident, US citizen and the other being split between above referred to beneficiary and a US citizen resident.
What Canadian tax factor withholding rate is used upon death by the Canadian government when these two accounts are collapsed by the beneficiaries upon my death? Is it still 15% or more???

Should I consider increasing my withdrawals to more than the minimum as long as I maintain the 15%withholding rate??

Thank you
Thanks, Artistic95
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

As I said, unless you designate your spouse as the beneficiary, your RRIF will be collapsed the day you die, and since this would no longer be a periodic payment, it would be in Canada taxed at 25% in your (Or estate's) hands. The beneficiary(ies), regardless of their residency, would then get the remainder, with no further Cdn tax implications.

For US purposes, your RRIF would be part of your estate, and any tax would be determined based on your entire estate, and also who you gave the money to.

If you chose to accelerate drawing down your RRIF now, remember that you are allowed to take twice the minimum or 10% (whichever is larger) over the year and be withheld at 15%.

Of course, 15% is only what you pay to CRA. You still have US tax to pay on at least a portion, if not all of the RRIF withdrawal, so taking more now may increase your US taxes as well, depending on how the tax credit works out.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Post by nelsona »

Your LIF withdrawals, for example, are 100% taxable in US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
artistic95
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Joined: Wed Sep 26, 2012 12:27 pm
Location: Lake Wales, Florida,33859

Nelsona, thank you !!

Post by artistic95 »

thank you !!!!
Thanks, Artistic95
mikie
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Joined: Thu Jan 07, 2016 1:08 pm

Post by mikie »

Re transfers between registered accounts being non events for IRS and CRA thanks, nelsona. Do you happen to have a link or IB reference for IRS at your fingertips on this topic? I have searched the IRS website with no luck.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

At this point on such a simple thing, there is no need to have references for all these. You aren't even reporting the RRSPs in any event, and it is a little much to ask me to look through 12 years of my posts to find it.

But since you lobbed this softball to into me, here is the homerun: IRS Rev. Ruling 89-95.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
mikie
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Joined: Thu Jan 07, 2016 1:08 pm

Post by mikie »

Thanks, nelsona. I suspected that you wouldn't be able to resist taking a swing, and you did indeed hit a home run. :)
artistic95
Posts: 27
Joined: Wed Sep 26, 2012 12:27 pm
Location: Lake Wales, Florida,33859

Nelsona, thank you again

Post by artistic95 »

you advise I can withdraw up to the higher of 10% of 1/1 balance or twice the minimum to maintain 15%withholding.

Is there a difference if between a LIF or a RRIF ?

Is there a maximum of a RRIF or LIF that can be withdrawn and at what tax rate if I chose to c collapse them?
Thank you
Artistic95
Thanks, Artistic95
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

No difference. The difference is between an RRSP and a RRIF/LIF. RRSPs are subject to 25% regardless of the withdrawal.

You ask:
Is there a maximum of a RRIF or LIF that can be withdrawn and at what tax rate if I chose to c collapse them?

Are you seriously asking this AGAIN? I've answered this twice in this thread alone.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
artistic95
Posts: 27
Joined: Wed Sep 26, 2012 12:27 pm
Location: Lake Wales, Florida,33859

Thank you again

Post by artistic95 »

Artistic95
Thanks, Artistic95
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