Distribution from RRSP RRIF and PFIC and QEF

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MFHEB2018
Posts: 3
Joined: Sat Feb 17, 2018 3:12 pm

Distribution from RRSP RRIF and PFIC and QEF

Post by MFHEB2018 »

I lived in USA and I have 3 RRSP which I transferred into RRIF to start withdrawing money from those in 2017.
The 3 banks are each taking 15% of the amount they are giving me. I will enter the amount received plus the tax I paid for credit however USA is giving just a percentage of that credit. MY QUESTION is that one of the bank is placing my money in different funds and they provided me with a "Passive Foreign Investment Company Annual Information Statement" and Instruction to fill out a 8621 form. I have NO IDEA what this is all about and what to do with this. Do I need to fill out any 8621? does that mean I have additional tax to pay ? This is from my RRSP that I am withdrawing. And for next year tax that is 2018 tax Am I better tell the bank to sell all those fund and place everything in standard investment or just pull out my money? Again I have no clues what to do with this and even with the instuctionsI do not understand what I need to do and what are the implications on tax. HELP PLEASE
Helene
MFHEB2018
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

As long as the funds are being kept in your RRIF, you do not have any PFIC filing obligations. However, if you are taking the funds out of your RRIF and investing it in normal investment accounts, then you are subject to PFIC rules. Your broker should not be doing this, because as a US resident you are not allowed to have investment accounts outside of retirement accounts. So they should only be investing your RROF withdrawal in cash.

Just a reminder on US taxation: the GROSS amount you report is the amount before the 15% tax was removed. And, you are only taxable on the growth of your accounts since you moved to US, not the entire amount.

The 15% is still used as a credit. If you report the whole amount as taxable in US, then, no, the 15% will not all be used up, becuae your overall tax is not 15% on your 1040.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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