Defined Benefit Plans

musa · Post by **musa** » Sat Aug 18, 2007 8:27 pm

Canadian working in the US has been advised by the tax experts at one of the big accounting firms that contributions or accruals for service to a canadian registered defined benefit plan for service while the employee is working in the US are taxable in the US in the current year.

Does anyone have any experience with this?

nelsona · Post by **nelsona** » Sat Aug 18, 2007 10:21 pm

This is not correct. The contributions YOU make are not tax-deductible, but the comapnies contributions, as well as the growth are not taxable in US until withdrawn.

musa · Post by **musa** » Thu Aug 23, 2007 10:44 pm

Thanks Nelson, is there any reference in the IRS code I can refer to for quidance?

nelsona · Post by **nelsona** » Fri Aug 24, 2007 6:41 am

The treaty

musa · Post by **musa** » Fri Aug 24, 2007 5:06 pm

I've looked at the treaty and it only addresses the growth, not contributions.

nelsona · Post by **nelsona** » Fri Aug 24, 2007 11:18 pm

Since the treaty contradicts what big-time accountant told you about accruals in your plan, I wouldn't worry about the employer contributions. They aren't taxable in your hands in either Canada or US.

Larry R · Post by **Larry R** » Sun Aug 26, 2007 10:26 am

The defined benefit plan could effect the amount allowed for your RRSP deduction, correct? Not sure about IRA, etc...

nelsona · Post by **nelsona** » Mon Aug 27, 2007 9:42 am

Yes these palns are like any other pension, and cause an adjustmwent to RRSP limits.

Not germane to this thread however.

Larry R · Post by **Larry R** » Mon Aug 27, 2007 5:54 pm

Should I have just posted it in the non-sequitur thread?

nelsona · Post by **nelsona** » Mon Aug 27, 2007 11:23 pm

Yes, the weather will be warm tomorrow.

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