How to withdraw rrsp now living in US

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Frommontreal2AZ
Posts: 3
Joined: Tue May 23, 2023 5:52 pm

How to withdraw rrsp now living in US

Post by Frommontreal2AZ »

I am 60 yrs old dual citizen receiving disability in Arizona. I have lived in the US 24 years and have $180K rrsp and $70k lira in Canada. I want to understand the most tax effective way to withdraw this amount as I expect low revenue for the next several years. I have never notified the irs of my rrsp, as I don’t think anything is actionable until I start withdrawing the funds.
Appreciate your insights, thanks.
nelsona
Posts: 18347
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: How to withdraw rrsp now living in US

Post by nelsona »

Well, you *should* have been informing them of your RRSP through various methods starting in 1985 (so, as soon as you moved) but that ended a few years ago, so no harm no foul. I would hope, at a minimum you have been reporting FBAR all these years.

The key information you need is the book value of your RRSP on the day you became a US taxpayer, That portion of your RRSP is not taxable in US. Your LIRA is 100% taxable in US.

At this point, the most effective way of meshing Cdn tax and US tax is to convert your RRSP into a RRIF, so that yearly withdrawals of uptp 10% of the value will be taxed at 15%. How you withdraw your LIRA will depend on the rules in the province which governes your account, but probably it should be converted to a LIF, and periodic withdrawals set up, so it too will be txed at 15% in Canada.
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Then you report the withdrawls from each of these accounts, and figure the non-taxable portion as I described above., and take the 15% tax as a credit on form 1116 of your 1040.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Frommontreal2AZ
Posts: 3
Joined: Tue May 23, 2023 5:52 pm

Re: How to withdraw rrsp now living in US

Post by Frommontreal2AZ »

Many thanks for the detailed reply.
I am from Quebec. Are you familiar with their rules?
nelsona
Posts: 18347
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: How to withdraw rrsp now living in US

Post by nelsona »

I'll leave that to you. It also depends on how your company set up the LIRA.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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