My wife and I saved a little in RRSP's starting about the time they became a thing until we moved to the US 30 years ago. I became a US citizen about 20 years ago and she still has a green card.
While in Canada, I also contributed to a pension plan. The pension contributions in effect created the situation where none of the RRSP contributions were deductible. Therefore they were made with taxed money. I believe the principle of no double taxation applies here, and that the amount of money that we put into the RRSP should be tax exempt. We are about about to change my RRSP to a RRIF as I am 69 soon 70. Am I correct that it should not be taxed?
The current institution is in no position to know how much was the original investment at this point and I anticipate they will just want to have it all taxed.
The folow-up question: how can I establish the amount that was the cost basis of after-tax dollars. Should I write the CRA and ask for a special dispensation?
RRSP with after-tax contributions
Moderator: Mark T Serbinski CA CPA
First we need to establish why they were not deductible.
Did your pension adjustment result in you having no contribution room, and your contributions were really an over-contribution? Or did you simply not have enough income to make the contribution worth it from a deduction point of view?
If you have unused RRSP contributions, then CRA should have a record of those (they would appear on your annual RRSP contribution limit calculation (yes, CRA should still have a record of that limit on your account).
As to getting those undeducted contributions tax-free CRA has a form T3012A, but it only addresses withdrawals made within 2 years of the undeducted contribution. So you may be out of luck there getting the money tax-free.
There is a form T746, which allows you to claim a deduction on your Cdn tax return for those contributions, which has no year limit. But this would require you to file a tax return to claim this deduction line 232, which might not be possible for you as a non-resident, since you are subject to flat tax with little recourse.
There is also the matter of US tax of course, which, in order to be able to claim a portion as non-taxable, would require that you kept a record of the value of your RRSP when you arrived in US. Only that amount would be non-taxable, prorated over your withdrawals.
Did your pension adjustment result in you having no contribution room, and your contributions were really an over-contribution? Or did you simply not have enough income to make the contribution worth it from a deduction point of view?
If you have unused RRSP contributions, then CRA should have a record of those (they would appear on your annual RRSP contribution limit calculation (yes, CRA should still have a record of that limit on your account).
As to getting those undeducted contributions tax-free CRA has a form T3012A, but it only addresses withdrawals made within 2 years of the undeducted contribution. So you may be out of luck there getting the money tax-free.
There is a form T746, which allows you to claim a deduction on your Cdn tax return for those contributions, which has no year limit. But this would require you to file a tax return to claim this deduction line 232, which might not be possible for you as a non-resident, since you are subject to flat tax with little recourse.
There is also the matter of US tax of course, which, in order to be able to claim a portion as non-taxable, would require that you kept a record of the value of your RRSP when you arrived in US. Only that amount would be non-taxable, prorated over your withdrawals.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Did CRA ever come after you for penalties? Even back then one was not allowed to overcontribute by more than $8000 LIFETIME (now it is $2000).
The PA (pension adjustment) not only affected whether a contribution was deductible, it also affected the amount you were legally allowed to contribute. The excess was subject to penalty.
I suspect that since they were not deductible you never reported that you had made the contribution (now you must report the contribution even when not deducted, I suppose, because many people did just as you did, avoiding over- contribution rules).
In any event, you will not be able to have CRA allow the firm to give you the money tax-free, since the contribution is more than 2 years ago, and it is unlikely that you have the circumstances that would make it beneficial to file a 217 election when you take the money out, so the entire amount is going to be taxable at flat rate.
Given the unlikelihood of any relief, and the great possibility that they will now bew looking at over contribution penalties, I would proably leave it alone.
The PA (pension adjustment) not only affected whether a contribution was deductible, it also affected the amount you were legally allowed to contribute. The excess was subject to penalty.
I suspect that since they were not deductible you never reported that you had made the contribution (now you must report the contribution even when not deducted, I suppose, because many people did just as you did, avoiding over- contribution rules).
In any event, you will not be able to have CRA allow the firm to give you the money tax-free, since the contribution is more than 2 years ago, and it is unlikely that you have the circumstances that would make it beneficial to file a 217 election when you take the money out, so the entire amount is going to be taxable at flat rate.
Given the unlikelihood of any relief, and the great possibility that they will now bew looking at over contribution penalties, I would proably leave it alone.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Interesting re the over-contribution penalties. The advice I received at the time was that a contribution over the limit was permitted. I was unaware of the penalty implications. Well it wasn't a lot of money and there weren't the automated systems of today. Seems it went under the radar.
I concur that leaving it alone is the probably best course. Thanks Nelson
And thanks for clarifying on your site the SEC stance on RRSP accounts of expats living in the US. I have been frustrated and misinformed by a certain bank for the last 17 years. Thist has cost me in opportunity to grow these savings. It is so nice to finally know the real facts even if it is too late.. I began to believe that the SEC was unhappy with losing the war of 1812 and they were taking it out on Canadian expats.
I concur that leaving it alone is the probably best course. Thanks Nelson
And thanks for clarifying on your site the SEC stance on RRSP accounts of expats living in the US. I have been frustrated and misinformed by a certain bank for the last 17 years. Thist has cost me in opportunity to grow these savings. It is so nice to finally know the real facts even if it is too late.. I began to believe that the SEC was unhappy with losing the war of 1812 and they were taking it out on Canadian expats.