Dpsp merge to rrsp

newbie12345 · Post by **newbie12345** » Fri Jul 27, 2012 8:58 am

Hi Nelsona,

I have a question about dpsp merge to rrsp transaction

After I moved to u.s. in the middle of 2005 and transfered to my employer's u.s. branch, the institute handle our company's group rrsp/dpsp noticed me that I am no longer canadian employee and they transfer my dpsp into my rrsp.

Should I report to IRS for this transfer ? Do I need to pay tax for the dpsp since they might treat it as withdraw from dpsp and contribution to rrsp?

nelsona · Post by **nelsona** » Tue Jul 31, 2012 8:55 am

There is no tax related to this transfer. You have been reporting the RRSP all along I assume. Just remember that the dpsp is fully taxable in US when you with draw it, so your RRSP is "more taxable" in future than if you did not ad the dpsp to it.

newbie12345 · Post by **newbie12345** » Tue Jul 31, 2012 4:50 pm

Hi Nelsona,

Thanks a lot for so many help!

One more question here:

Let say I have RRSP book value (cost basis) for $10k invested in fund A on Jan 1/2005
I have DPSP book value (cost basis) for $10k also invested in fund A on Jan 1/2005.

I moved to U.S. in April. After that, my employer transfer me to it's U.S. branch.

Financial insititute hold my DPSP/RRSP closed my DPSP account, transfer the fund A into my RRSP account Since the investment in the DPSP is not so successful that the fair market value for the fund A is $8k.

The new snapshot of it is like RRSP: fund B book value = $20k. DPSP closed.

After that, I made contribution to my RRSP with fund A for $4k.

fund A is not performing well. Now my RRSP only worth $15k.

Now if I closed my RRSP account and take all the $15k money out.
How much is the taxable income?

- $1k : book value of Jan /2005 + 4K contribution - 15k total withdraw?
- $8k: DPSP fairmarket value merged into RRSP?
- $10k: DPSP book value merged into RRSP?

nelsona · Post by **nelsona** » Tue Jul 31, 2012 5:06 pm

"The new snapshot of it is like RRSP: fund B book value = $20k. DPSP closed. "

Incorrect. The cost basis for your RRSP remains $10K. The Dpsp is fully taxable in US.

"After that, I made contribution to my RRSP with fund A for $4k. "

Your cost basis is now $14K.

"Now if I closed my RRSP account and take all the $15k money out."

1K. Once it was merged, there is no separation between the Dpsp and the original RRSP. The unchanged cost basis accounts for any loss.

newbie12345 · Post by **newbie12345** » Tue Jul 31, 2012 5:18 pm

I see. So the merged in DPSP is like income in my RRSP. It could be offset by later investment lost in the RRSP?

nelsona · Post by **nelsona** » Tue Jul 31, 2012 5:25 pm

Yes. It is taxable income to your RRSP, both for Cdn and US purposes.

You don't want to lose money, bacuse although you may have little US tax on the entire RRSP, you will still be apying 15 or 25% tax to Canada. So having it gain is generally better than losing.

Combining them has made your life simpler however, since i they were separate, and one was losing and one was gaining, you could see yourself paying US tax on one and having to wait to collect on the loss of the other until all your RRSP/DPSP was cashed out.

Tvitacha · Post by **Tvitacha** » Wed Aug 29, 2012 10:28 am

OK, i need help with some thing about accounting for Governmental and Nonprofit Entities, where to get more info about that thing? I saw there is some book packs, but what is of that book the best for me?

Tvitacha · Post by **Tvitacha** » Wed Sep 05, 2012 9:08 am

[quote="Tvitacha"]OK, i need help with some thing about accounting for Governmental and Nonprofit Entities, where to get more info about that thing? I saw there is some book packs, but what is of that book the best for me?[/quote]

No edit...i find http://accountingforgovernmentalandnonp ... -15th.html this 15th edition are great. Thanks anyway.....