I have a LIRA that was created two years ago from a company pension plan. And I am planning to unlock and collapse the account. From what I read on Form 5, for non-resident of Canda I can only do a Full Withdrawal. My questions are:
- What is the tax consequences on the full withdrwal, is the tax reporting on U.S. side the same as withdrawing from a RRSP account? I have 8891 in order.
- There is a clause on Form 5 "Any withdrawal or transfer from your Ontario locked-in account may also affect your eligibility for certain government benefits." Does anybody know what this statement means?
Collapsing Ontario LIRA Account
Moderator: Mark T Serbinski CA CPA
You will pay 25% tax in canada, flat.
You will report it all on your 1040. It is not the same as RRSP since itwas formed from a pension. it is fully taxable in US.
The clause refers to benefits based on income level, like OAS, GIS, GST etc. Since you aren't getting any other Cdn benefits, what do you care?
You will report it all on your 1040. It is not the same as RRSP since itwas formed from a pension. it is fully taxable in US.
The clause refers to benefits based on income level, like OAS, GIS, GST etc. Since you aren't getting any other Cdn benefits, what do you care?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
nelson,
thanks for the reply.
does "fully taxable" mean every dollar after 25% deduction will be taxed at my marginal rate in U.S. for the year it is collapsed?
Do you know if the LIRA is allowed to be transfered to a regular RRSP account under non-resident unlocking? I don't see it is available on the Form 5.
And for goverment benefits, I was thinking in terms of CPP. I have paid into CPP for more than 10 years, am I going to get CPP benefit later?
thanks for the reply.
does "fully taxable" mean every dollar after 25% deduction will be taxed at my marginal rate in U.S. for the year it is collapsed?
Do you know if the LIRA is allowed to be transfered to a regular RRSP account under non-resident unlocking? I don't see it is available on the Form 5.
And for goverment benefits, I was thinking in terms of CPP. I have paid into CPP for more than 10 years, am I going to get CPP benefit later?
It means every dollar. period. There is no 25% deduction from that amount for the cdn tax you pay. You report the whole amounton your 1040.
The 25% tax will be used either as a credit on form 1116 or, less likely, a foreign tax deduction of schedule A.
The ontario unlocking rules require full collapse.
CPP has nothing to do with RRSP.
The 25% tax will be used either as a credit on form 1116 or, less likely, a foreign tax deduction of schedule A.
The ontario unlocking rules require full collapse.
CPP has nothing to do with RRSP.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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