QUESTION: I am a Canadian citizen who has lived and worked in the
US for nearly 7 years. I kept a personal RRSP and an RPP from a
former employer in Canada. Since arriving in the US, I have been
filing Form TD F 90-22.1 and, after some professional guidance in
2002, Form 8833 to disclose my treaty-based return position for
both my RPP and RRSP.
It appears based on recent discussions on your site that 8891
will replace 8833 for 2005 and afterwards. Is this correct?
In 2005, for administrative reasons, my RPP was required by the
plan managers to be transferred to a personal RRSP, and since
then have again required me to transfer the funds to a second
RRSP.
How should I best address the multiple changes to my funds
formerly in the RPP using 8891?
Thanks for helping out countless well-meaning taxpayers perplexed
by a seemingly overwhelming system with your site.
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david ingram replies:
Few people ever used the 8833 form. It was not required for some
reason that I do not remember. However, I agree that it seemed
to be required and no damage was done by filing it. However, the
8891 does NOT replace the 8833..
The 8891 replaces the need to file a 3520 or 3520A and has taken
over all of the notices and REV-PROCs on the subject.
But, you should have filed it for 2004 as well.
Just fill out one for each RSP you have and treat yourself as a
beneficiary (not an annuitant as the following missive I received
from the Office of the Chief Counsel of the IRS suggests):
--------------------------------
taxman at centa.com
Hi there:
We are trying to make Form 8891 better. Do you agree with the
comments set forth below?
For reasons that are not entirely clear, Form 8891 provides
different filing
instructions for the "annuitant" and "beneficiary," even though
they are the
same person under the ITA. Form 8891 defines a beneficiary as
someone who
would have to pay U.S. income tax on RRSP/RRIF investment
earnings if he or
she had not made a treaty election. It defines an annuitant as
the person
designated as the annuitant under an RRSP/RRIF trust. However,
the ITA
defines an RRSP or RRIF annuitant as the person entitled to
receive
retirement income from the trust, or, in the event of the account
holder's
death, the surviving spouse or common-law partner - a definition
that also
includes the trust's beneficiary.
The Form 8891 instructions indicate that an annuitant should not
complete
the treaty election in section 6 of the form. As a result, a
taxpayer who
follows the instructions for an annuitant will not provide
sufficient
information to make the election. RRSP and RRIF owners should
consider
following the instructions for a beneficiary to ensure that they
claim a
treaty exemption from taxes on investment earnings, or should
indicate that
they have previously made a treaty election.
Thanks!
Bill Yates
Attorney
Office of Chief Counsel (International)
Internal Revenue Service
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