RRSP Reporting and 8891s

[oaktree]

We've been following your thread on 8891s and as a result are revisting our 1040s submitted from 1997 to the present. Two questions came up.

Question 1:

We are Canadians, married,with RRSPs living in the US since 1997. To report our RRSPs to the IRS from 1997 to 2006 our tax preparer at the time provided a document attached to our jointly-filed 1040 which was titled "General Elections": "Election to defer taxation on RRSP Earnings under Article XXIX(5) of Canada U.S. Income Tax Convention of 1980." This document recorded where the accounts were held, the account numbers, the balances, how much the accounts grew for each year, that there were no contributions, and what the last year was for the election. In 2007, we became aware of form 8891 and have filed those from 2007 to 2009.

Our question is, does it matter to the IRS what form the General Elections and the plan balances are reported on as long as they are reported? Do we have to go back to submit 8891s for 1997 to 2006, repeating this information?

Question 2:

If we don't have to go back and file 8891s from 1997 to 2006, what is the correct way to fill out 8891 from 2007 onward? Our 1997-2006 General Elections were made were under Article XXIX(5) of Canada U.S. Income Tax Convention of 1980. In question 6a on 8891, it now says that the election is made under a different article, Article XVIII(7) of the US-Canada income tax treaty (no date). For 2007, does that mean that it's correct for us to answer NO to 6a because we made the 1997-2006 elections under a different section of the treaty? In fact, we answered NO to 6a in 2007 and made the irrevocable election for 2007 and subsequent years. In 2008 we began answering YES to 6a.

In a related matter, in 2009 instead of answering 2007 to 6b, in error we answered 1997 (the first year we made an election under any treaty). Is this immaterial and can we continue to write 1997? Or should we go back, file an ammendment to 8891 to say 2007 in 6b and continue to report 2007 as the first year our election came into effect?"

Many thanks for taking the time to answer our questions. This is a an extremely valuable forum for us.

Oaktree

[nelsona]

The previous statements were made in compliance with th IRS Rev Procs in eefect at the time and are OK (not perfect, but OK).


Your 8891;s are fine. Just remember in future that 3007 was your first year.

For eventual tax purposes, you will need to know your RRSP book value on the day you became taxable in US, in 1197. That will be the non-taxable amount of your RRSP for IRS purposes.

All other figures are unimportant.

[oaktree]

Good news.
Thanks again for your help and for this very valuable forum.
Oaktree