Ending 3520/3520A for RESP

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CdnAmerican
Posts: 245
Joined: Tue Aug 30, 2011 12:15 am

Ending 3520/3520A for RESP

Post by CdnAmerican »

Hi all - I have an RESP which I have filed the 3520/3520A for each year. With the new IRS ruling that an RESP no longer requires a 3520/3520A, how do I stop filing these? It might be as simple as not filing it this year, but the $10K penalty scares me. Should I:
1) file for one more year, and check the box "final return",
2) send a letter stating that this does not actually require a 3520/3520A, or
3) something else (e.g., call the IRS or ask for a letter indicating a 3520 is no longer needed)?

Thanks!
Not a professional opinion.
cqhg
Posts: 16
Joined: Fri Dec 14, 2018 11:18 pm

Re: Ending 3520/3520A for RESP

Post by cqhg »

I made a final return for RESP this year, the 10K penalty scares me too
MGeorge
Posts: 313
Joined: Fri Jun 22, 2012 9:23 am
Location: Canada

Re: Ending 3520/3520A for RESP

Post by MGeorge »

I agree. Those robo letters are scary. I will file a final return with an explanation attached the end. One thing to consider is that if there is a non-zero balance included on the balance sheet for form 3520A, the system might expect another return in future years. It might be best to fill out 3520A as if the trust was closed and all balances distributed, then explain in an attachment for any human reader.

I'm interested in what others have to say.
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MGeorge is neither an accounting nor taxation professional.
ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

Re: Ending 3520/3520A for RESP

Post by ND »

Make sure to note that you can contribute a lifetime maximum of CAD $50,000 per beneficiary to an RESP. Note that RESPs that are designed as family plans with more than four named beneficiaries can exceed the $200,000 US lifetime contribution threshold and thereby lose said 3520 exemption. ‘Contributions to the trust are limited to $10,000 or less annually or $200,000 or less on a lifetime basis, determined using the U.S. Treasury Bureau of Fiscal Service foreign currency conversion rate on the last day of the tax year (available at https://www.fiscal.treasury.gov/reports ... s-exchange).’
CdnAmerican
Posts: 245
Joined: Tue Aug 30, 2011 12:15 am

Re: Ending 3520/3520A for RESP

Post by CdnAmerican »

HI all - Just a bump for this thread, now that the proper 2020 forms have come out from the IRS. The instructions for the 3520 state that the form does not need to be filed for trusts which fall under the new regulations. For people who have been filing the 3520 for their RESP, are you filing this form again this year and calling it the Final Return, or not filing it at all? TIA
Not a professional opinion.
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