401K used to live in Texas - now Toronto want to put

Dear Mr. Ingram,
I hope you are well.
My husband and I had a phone consultation with you in January while still in Texas (we are in Toronto, Ontario now).  We needed some advice on XXXXXX's 401 K.  We wanted to know what the consequences of cashing the 401 K were and if it was possible to transfer the 401K to an RRSP.
We did cash the 401K but cancelled the transaction; therefore money is still in the USA.  I am still trying to find a way to transfer it to an RRSP, which brings me to my questions.  When a 401K is cashed, how is it reported on the 1040?  I am asking because Fidelity, at our request, did not withhold any tax when we cashed the 401K in January.  Is there a way to show on the US income tax form 1040 that this money was transferred to an RRSP in Canada?  On your site it says that Canada allows 401K to be transferred into an RRSP but the institutions will not allow it, does the IRS allow it?  If the IRS allows it maybe we can buy pass the institution?  
I may be chasing windmills but there must be a way to get that money to Canada without paying the taxes and penalties.
Thank you for your time.
david ingram replies:
It depends upon what Fidelity puts on the 1099R slip they issue.  Any Canadian Institution will accept the money as a deposit.  It is the US institution which will not usually  allow it to be rolled over into a Canadian RRSP.
You can:
1.     pay the tax in the US
2.    report the money again on your Canadian tax return and pay the tax again.
3.    Make a deposit to your Canadian RRSP of the amount you withdrew and getthe RRSP rollover deuction under section 60.
Not a direct transfer but it will work.
in th alternative and this depends upon what the Fidelity slip says.  You could jut claim it as a rollover and avoid the US 10% penalty.  
Whatever you do, you should make your Canadian RRSP contribution before Dec 3s1st to make it have the characteristics of a rollover.  If you leave it until after Dec 31st, it will not look like a rollover.
Answers to this and other similar  questions can be obtained free on Air every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier Partners and I will be hosting an INFOMERCIAL but LIVE talk show called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the internet at
Local phone calls to (604) 280-0600 - Long distance calls to 1-866-778-0600. 
Old shows are archived at the site.
This from ask an income tax immigration planning and bankruptcy expert consultant guru or preparer  from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate:
multi jurisdictional cross and trans border expatriate gambling refunds for the United States, Canada Mexico Great Britain the United Kingdom, Kuwait, Dubai, Saudi Arabia, South Africa,  Thailand, Indonesia, Egypt, Antarctica,  Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, American and Canadian and Mexican and any of the 43 states with state tax returns, etc.
income tax wizard wizzard guru advisor advisors experts  specialist specialists  consultants taxmen taxman tax woman planner planning  
preparer of Alaska,  Alabama,  Arkansas,  Arizona, 
 California Denver  Colorado, Connecticut,  
Delaware District of Columbia Miami  Florida, 
Garland Georgia,  Honolulu Hawaii,  Idaho,  Illinois,
 Indiana Des Moines Iowa  Kansas  Kentucky, 
 Louisiana  Bangor Maine  Maryland  Boston, Massachusetts, Michigan, Minnesota,  
Mississippi,  Missouri,  Montana,  Nebraska,  
Nevada, New Hampshire,  New Jersey, 
New Mexico,New York, North Carolina,  
North Dakota,  Ohio,  Oklahoma,  Oregon. 
Paris,  Rome, Sydney, Australia Hilton
Pennsylvania,  Rhode Island,  Rockwall, 
South Carolina, South Dakota, Tennessee,  
Texas,  Utah, Vermont,  Virginia, 
West Virginia, Wisconsin, Wyoming, 
British Columbia, Alberta, Saskatchewan, 
Manitoba, Ontario, Quebec City, 
New Brunswick, Prince Edward Island, 
Nova Scotia, Newfoundland, Yukon and 
Northwest and Nunavit Territories,  
Mount Vernon, Eumenclaw, Coos Bay 
and Dallas Houston Rockwall Garland 
Texas  Taxman and Tax Guru  and wizzard 
wizard -
 David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321 
davidingram at shaw.ca
www.centa.com www.david-ingram.com
Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://www.centa.com/CEN-TAPEDE/centapede/attachments/20040803/df639817/attachment.htm


Trackback URL for this entry: http://www.centa.com/trackback.php/UsCaWeekofMon20040802001273.html

No trackback comments for this entry.