USC/R at Death. 401(k)/IRA, RRSP/LIRA/RRIF/LIF Taxation for Deceased and Cdn Beneficiaries?

[jtserbinski]

Hi, and thanks in advance!

I'm a dual citizen and US resident. My Beneficiaries are Cdn citizens and residents.
Been thinking about death and tax/estate planning :(

I've been going through the scenarios. Some I *think* I found answers here, but others have no idea. Appreciate any input!

Taxation at my death ...

[1] 401(k)/IRA
Me: no tax; account goes to beneficiaries. (Not sure the actual mechanics of how this happens. Will my 401k/IRA plans [Schwab, Fidelity] set up a special sell-only account so they can liquidate the assets? Is this an issue for Cdn resident?)
Beneficiaries: they have 10 years to withdraw the funds. (a) US: They must get Tax IDs and file 1040 for US-sourced income, (b) Cdn: file T1 and use foreign tax credit for US-sourced income.

[2] RRSP/LIRA/RRIF/LIF
? similar to Canada ?
Me: (a) Cdn: 25% lump sum withholding, final. (b) US: my US estate files 1040 the same as if I was alive and withdrew all the funds. (Tax rules depending on whether it is RRSP/RRIF (tax on "earnings" only) or LIRA/LIF withdrawl (tax on total amount), as discussed here previously.)
Beneficiaries: no tax

With this information I hope to put together a plan to:
(a) minimizing lump sum US tax of RRSP/LIRA/RRIF/LIF
(b) perhaps withdrawing 401(k)/IRA sooner and investing in index funds so my beneficiaries can inherit stepped up basis. (Essentially, prepay the taxes for the beneficiaries and get some free capital gains.)