tax on the withdrawals from 401(K) Part II
A couple of days ago I told a writer that he had to pay tax on the withdrawals from his 401(K) which is true but he or she can deduct the amount that he or she put in the plan which was not deductible as Nelson Andrew points out in the following.
Nelson, Andrew G. wrote:
http://www.cra-arc.gc.ca/E/pub/tp/it502/it502-e.pdf
paragraph 6:
"all amounts received out of or under the plan or
from the disposition of an interest in the plan constitute
income from an office or employment to the recipient in the
year received EXCEPT to the extent that they represent one or
more of the following amounts: ...
(b) amounts which represent a return of the EBP
beneficiary’s own contributions, ...."
http://www.cra-arc.gc.ca/E/pub/tp/it499r/it499r-e.pdf
has much the same verbiage.
I am unaware that CRA has changed these interpretations.
Gary Gauvin also has a Private tax ruling on this point:
http://www.garygauvin.com/WebDocs/CCRA/RevCan_403btxt.pdf
The ITA sections are still applicable. Remember, this is considered an
EBP, not a pension.
From: David Ingram [mailto:[email protected]]
Sent: Friday, March 23, 2007 12:11 PM
To: Nelson, Andrew G.
Subject: Re: US USA / CANADA Income Tax Help - IRA taxation in Canada
-David Ingram gives expert income tax & immigration help to non-resident
Americans & Canadians from New York to California to Saudi Arabia to
Mexico to China or Chile - Cross border, dual citize
If you can find where it is being granted 'now' I and thousands more
would appreciate it. they stopped four years ago as far as I know,.
david
Nelson, Andrew G. wrote:
CRA does grant relief for employEE contributions made to 401(k)/IRA
while resident of Canada. This has long been their position. A
withdrawal from an IRA would be treated as a combination of
non-taxable
employee contributions, plus taxable employer contributions, plus
taxable growth.
I can dig up the CRA reference if you would like.
By the by, the latest budget mentioned that treaty negotiations where
on-going on this very subject, with the goal of harmonizing the
treatment of cross-border pension contributions.
Nelson, Andrew G. wrote:
http://www.cra-arc.gc.ca/E/pub/tp/it502/it502-e.pdf
paragraph 6:
"all amounts received out of or under the plan or
from the disposition of an interest in the plan constitute
income from an office or employment to the recipient in the
year received EXCEPT to the extent that they represent one or
more of the following amounts: ...
(b) amounts which represent a return of the EBP
beneficiary’s own contributions, ...."
http://www.cra-arc.gc.ca/E/pub/tp/it499r/it499r-e.pdf
has much the same verbiage.
I am unaware that CRA has changed these interpretations.
Gary Gauvin also has a Private tax ruling on this point:
http://www.garygauvin.com/WebDocs/CCRA/RevCan_403btxt.pdf
The ITA sections are still applicable. Remember, this is considered an
EBP, not a pension.
From: David Ingram [mailto:[email protected]]
Sent: Friday, March 23, 2007 12:11 PM
To: Nelson, Andrew G.
Subject: Re: US USA / CANADA Income Tax Help - IRA taxation in Canada
-David Ingram gives expert income tax & immigration help to non-resident
Americans & Canadians from New York to California to Saudi Arabia to
Mexico to China or Chile - Cross border, dual citize
If you can find where it is being granted 'now' I and thousands more
would appreciate it. they stopped four years ago as far as I know,.
david
Nelson, Andrew G. wrote:
CRA does grant relief for employEE contributions made to 401(k)/IRA
while resident of Canada. This has long been their position. A
withdrawal from an IRA would be treated as a combination of
non-taxable
employee contributions, plus taxable employer contributions, plus
taxable growth.
I can dig up the CRA reference if you would like.
By the by, the latest budget mentioned that treaty negotiations where
on-going on this very subject, with the goal of harmonizing the
treatment of cross-border pension contributions.
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