RRIF and RRSP - Canadian and United States taxes

[ahays]

Thank you for all of the great information posted on this forum. Your help clarifying details for dual Canadian - United States citizens is appreciated very much.

Suppose that an individual is a Canadian citizen and contributed to an RRSP. She later moves to the United States and several years later becomes United States citizens. I understand that the Canadian tax rate for an RRSP is 25% and that its tax rate for an RRIF is 15%. Under the ITCIA, a distribution from an RRSP does not qualify as a periodic pension payment unless it is an annuity. An RRIF does not qualify as a periodic pension payment if the distribution is greater than 10% of its value at the beginning of the year. Many posts in the forum stress that converting an RRSP to an RRIF that qualifies as a periodic pension payment is a solid option for obtaining the lower 10% Canadian tax rate.

Regarding United States taxes, does the cost basis v. gain factor apply to RRIF payments? I understand that the gain over cost basis factor applies to RRSP payments, but I'm not sure if it applies to RRIF payments. Also, is the gain calculated from the date that an individual becomes a United States resident or from the date that the individual becomes a United States citizen?

[nelsona]

Yes, the book value on arrival in US is still the basis for determining the taxable portion of your withdrawal, regardless of whether it is RRSP or RRIF, or whether it is periodic or not. And it is the day one becomes taxable in US that determines your arrival date.

By the way, I'm sure your meant "the lower 15% Canadian tax rate"

[ahays]

Yes, I meant 15%. Thanks for catching the typo.