401K Contributions Deductible?

stewak2 · Post by **stewak2** » Fri Oct 19, 2012 1:31 pm

USC resident in Canada commuting to work in USA for US company.
Received notice from CCRA that they want to include box 12A Code 1D of W2 as foreign employment income. I believe this is employer contribution to employer run 401K. I thought the 5th Protocol allowed these to be deductible, subject to RRSP limits?
If I have to pay it, I doubt it can be uses as FTC to amend US return, since it wasn't taxible in US ( at the moment ).
I thought the point of 5th Protocol change was to synchronize the taxation, I would claim this as income and pay CCRA and US when 401K money is withdrawn?

stewak2 · Post by **stewak2** » Fri Oct 19, 2012 1:37 pm

This is my own contributions - deferred salary is the definition...payroll deduction pre-tax.
Surely should be covered by 5th Protcol?

JGCA · Post by **JGCA** » Fri Oct 19, 2012 4:23 pm

You state that you are a US resident or a commuter between Canada and the US that case the 401(K) you are reporting to Canada on line 104 of the T1 then on line 207 you can claim the deduction based on the limitations you have in your RRSP cont limit. You need to fill out form RC268 to determine the limitations and eligibility to claim on line 207.

stewak2 · Post by **stewak2** » Fri Oct 19, 2012 4:39 pm

You are absolutely correct, lack of Form RC268 was the problem.
Didn't know I needed to file that.

nelsona · Post by **nelsona** » Sun Oct 21, 2012 10:23 pm

As JGCA probably stated, the 401(k) contributions (your own contributions) are included in your wages, and then the el;igible portion os deducted later.

The employer contributions are not reported anywhere. and are not on your w-2.

stewak2 · Post by **stewak2** » Sun Oct 21, 2012 10:34 pm

Seems they do care about the employer match, they use it to make pension adjustment to RRSP limit : "proscribed amount". The RC268 has a section where you have to report the employer contributions.
Makes sense I guess since the 401K deduction limit is your RRSP limit.

JGCA · Post by **JGCA** » Mon Oct 22, 2012 1:38 pm

Yes the employer portion too get reported on this form to determine the RRSP threshold limits.

nelsona · Post by **nelsona** » Mon Oct 22, 2012 2:22 pm

Yes, CRA does care about employer contributions. However these contributions do NOT appear on your W-2, which was your original assertion.

nelsona · Post by **nelsona** » Mon Oct 22, 2012 2:31 pm

If your firm is also putting aside funds in a "cash balance" plan, you must alos include this ammount in determining your PA.

Neither of these amounts are reported to you on any tax fom, ut it is your responsibility to find out these amounts and include them on your RC form.

With the employer match and cash balance, many find that not all thir 401(K) contributions are deductible in Canada, after the first year of doing the RC form.

stewak2 · Post by **stewak2** » Mon Oct 22, 2012 2:56 pm

I have a lot of contribution room dating from pre 2008/protocol change, when I didn't contribute to either an RRSP or 401K. Should last me a while.

Serbinski Accounting Firms

401K Contributions Deductible?

401K Contributions Deductible?

Correction on meaning of Box 12a Code D

Form RC268