Pub 575 and method of taxing RRIF withdrawals

[bwafusion]

Background: husband and wife dual CDN/US citizens residing in US and preparing to start RRIF periodic payments next year

I have reviewed IRS Pub 575 in relation to above. Assuming RRIF pension income is covered by Pub 575 then it seems the appropriate section falls under Taxation of Periodic Payments/Partly Taxable Payments/Simplified vs. General Rule/Fixed vs. Variable annuity.

Is the appropriate method and calculation to follow in this scenario General Rule and Variable annuity?

Thanks

[nelsona]

No. It is much simpler than that. Simply know either your contributions (if always a US citizen) or your book value on arrival date (if you later became a US person) . This part is non-taxable in US

Each year you take a withdrawal, you prorate the taxable vs non-taxable portion of the withdrawal based on how much the account has grown on Jan 1 of that year. This method reduces your non-taxable portion for the next year's calculation.

There are many posts on this. These other methods, which really only apply to US accounts, are so complex that one usually has to hire a accountant/life expectancy expert to determine this, Forget that,

[bwafusion]

Perfect. Thanks so much.

[bwafusion]

One more question on calculating the book value or "cost of the investment" for the RRSP/RRIF. As noted in a prior post on the forum, we immigrated to the US in 1993 so all RRSP contributions and realized growth would be non-taxable in the US up to that point. We returned to Canada in 2003 (as dual citizens effective 2001) and continued to contribute to our RRSPs until 2022 when we retired and moved back to the US.

My question is: the RRSP contributions between 2003 and 2022 would still qualify as "cost of the investment" as far as the US is concerned in terms of calculating the final or total book value of the RRIFs and the non-taxable amount therein prior to initiating the withdrawals, correct?

Thanks again.

[nelsona]

Yes, as long as tghey were not deductible on your 1040.

[nelsona]

Company sponsored RRSP contributions and any matching provided by the company would not be considered as "cost of investment"