Nelson, I would appreciate your input on our situation. I just came upon this forum and the topic of RSP Book Value. We moved to the U.S. in 2007 with 3 RSP accounts. I have the book value for 2 accounts (they were included in a departure valuation report prepared by RBC). For the 3rd account, we did not have a departure book value. We have been able to determine the RSP contributions (from prior year tax returns) and plan to use this for the book value.
I am not sure what I need to support my RSP Book Value claim to IRS. My questions for you would be:
1) Does the IRS expect us to have kept the book value at a security level? The investments, the custodian, and the currency (all in USD now) have all changed. We have not tracked book value at this level and only have point-in-time (at departure) values right now.
2) Can we just apportion (at approximate BV-USD to current MV-USD) at withdrawal time frame and deplete the book value through time?
3) To clarify, LIRA's are pension plans and fully taxable in Canada and US, correct? (i.e. Book Value at departure is not used).
Appreciate your thoughts and guidance. Thanks in advance!
RRSP & LIRA Book Values
Moderator: Mark T Serbinski CA CPA
1. First, were you a US Citizen before you moved to Canada? If so, the book value on arrival in US is not the important value to track, contributions are.
Otherwise, book value at arrival is a fixed valued determined when you began being taxable in US and would not change, regardless of what you later did with the contents of your RRSPs.
2. That is how you are supposed to do it, on an account basis
3. Correct, so 100% of any withdrawal from a Lira or its subsequent form (lif, annuity, etc) would be included in US income
Otherwise, book value at arrival is a fixed valued determined when you began being taxable in US and would not change, regardless of what you later did with the contents of your RRSPs.
2. That is how you are supposed to do it, on an account basis
3. Correct, so 100% of any withdrawal from a Lira or its subsequent form (lif, annuity, etc) would be included in US income
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
Nelson, thanks!
To answer your question: No we were Canadian citizens while in Canada. We only recently became dual citizens (just in time to vote?!?)
One last clarification on my part, the account Departure Book Values (CAD) are converted at the departure date exchange rate to USD and this value is "frozen". Later we would apportion the account book value to the RSP withdrawal as a % of the account RSP market value. I would see the math as follows:
BV @ Departure date (USD) = $120,000
MV @ RSP Withdrawal date (USD) =$200,000
RSP Withdrawal (USD) =$10,000
BV Apportionment = $6,000 ($120,000 / $200,000)
Remainnig BV (USD) =$94,000
How would I report this on my 1040? Is it as simple as:
Line 16a Pension and Annuities (total distribution) = $10,000
Line 16b. Taxable amount = $ 4,000 ($10,000 - $6,000)
Thanks again,
To answer your question: No we were Canadian citizens while in Canada. We only recently became dual citizens (just in time to vote?!?)
One last clarification on my part, the account Departure Book Values (CAD) are converted at the departure date exchange rate to USD and this value is "frozen". Later we would apportion the account book value to the RSP withdrawal as a % of the account RSP market value. I would see the math as follows:
BV @ Departure date (USD) = $120,000
MV @ RSP Withdrawal date (USD) =$200,000
RSP Withdrawal (USD) =$10,000
BV Apportionment = $6,000 ($120,000 / $200,000)
Remainnig BV (USD) =$94,000
How would I report this on my 1040? Is it as simple as:
Line 16a Pension and Annuities (total distribution) = $10,000
Line 16b. Taxable amount = $ 4,000 ($10,000 - $6,000)
Thanks again,
Brent in Ohio
Yes. At this point you would longer refer to book value. The correct term is "investment in the account", or, more simply cost basis.
The cost basis of your RRSP when you arrive is the Book Value. After that, book value ceases to have any meaning.
The cost basis of your RRSP when you arrive is the Book Value. After that, book value ceases to have any meaning.
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
And remember that the cost basis is dome on an account basis. If you mainatin 3 separate accounts, these each have their own cost basis
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 Nelson, I have one more question for you ... I understand you may not reply for another month ... but it came up as I was preparing my taxes.
Do I need to report the investment in each of our Canadian retirement accounts to the IRS? If yes, how would I do this? From my prior note, our basis would have been determined when we departed Canada (in 2007). For IRAs, I believe the IRS uses Form 8606 to track this.
I want to avoid the situation, sometime in the future when we are taking a distribution, where the IRS declines our use of the investment in the accounts because we had failed to file some IRS form some years ago.
If there is no IRS reporting, is it as simple as claiming a pro-rata change in the investment in each of the accounts when we take a distribution (as you previously had commented)?
Sorry, if I seem a little "detailed" about this. Again, appreciate all your assistance to this point.
Thanks!
Brent in Ohio
Do I need to report the investment in each of our Canadian retirement accounts to the IRS? If yes, how would I do this? From my prior note, our basis would have been determined when we departed Canada (in 2007). For IRAs, I believe the IRS uses Form 8606 to track this.
I want to avoid the situation, sometime in the future when we are taking a distribution, where the IRS declines our use of the investment in the accounts because we had failed to file some IRS form some years ago.
If there is no IRS reporting, is it as simple as claiming a pro-rata change in the investment in each of the accounts when we take a distribution (as you previously had commented)?
Sorry, if I seem a little "detailed" about this. Again, appreciate all your assistance to this point.
Thanks!
Brent in Ohio
Brent in Ohio
The book value is determined by you and tracked by you. No form to file. The old 8891 did not even have a spot to record this value.
The number of times that I have covered this issue, if there were a form I certainly would have mentioned it, no?
The number of times that I have covered this issue, if there were a form I certainly would have mentioned it, no?
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