Is a group RSP handled the same as a RRSP?

rafa02 · Post by **rafa02** » Fri Jan 13, 2017 6:38 pm

nelsona, I read some of your comments from a few years ago and it seemed you were stating that a GRSP was reported as an RRSP (these comments were prior to the elimination of 8891.)

I was reading a blog by an accountant at MNP (http://www.mnp.ca/en/posts/the-irs-chan ... ting-rules) and he made a comment that perhaps a GRSP was not to be treated the same as an RRSP.

I have a family member that is being offered a GRSP by the employer and was wondering what, if any, we are getting into RE IRS reporting.

nelsona · Post by **nelsona** » Fri Jan 13, 2017 7:58 pm

They accounts would be treated the same. HOWEVER, unlike a personal RRSP, employer-sponsored RRSP contribution are deductible from income on your US trax return, and, as such, are taxable when withdrawn.

So, while personal RRSP may have some tax-free portion with respect to IRS, a group RRSP does not.

rafa02 · Post by **rafa02** » Fri Jan 13, 2017 8:55 pm

Thanks for the quick reply. From the previous thread I was reading from a few years ago, you mentioned that if form 2555 was used to exempt foreign earned income, employer contributions could be considered tax exempt. Does this still apply?

nelsona · Post by **nelsona** » Sat Jan 14, 2017 8:53 am

Regardless of whether you use 2555 or not employer contributions are not taxable on the employees return and thus not part of the non-taxable portion of an employer sponsored Rrsp

nelsona · Post by **nelsona** » Sat Jan 14, 2017 9:03 am

The same is true for the employee's contribution, however you could elect to report the contribution as income since this is a treaty benefit that you are not required to take, and make that portion non taxable in future,but only that portion

MGeorge · Post by **MGeorge** » Mon Jan 16, 2017 12:42 pm

Another possible difference between a group RRSP and a personal RRSP might be the way the withdrawals are treated with respect to the NIIT (form 8960). While a personal RRSP is treated as a non-qualified annuity when withdrawn, this means that it would go on form 8960 as annuity income.

In the instructions for 8960, it says that foreign pensions where the contributions were in consideration for services provided, these foreign pension funds when withdrawn would not go on form 8960 as NIIT income. So, this difference might be significant.

nelsona · Post by **nelsona** » Tue Jan 17, 2017 11:01 am

Thanks for that good point.