RRSP cost base in US = David Ingram

My_question_is: Applicable to both US and Canada
Subject:        RRSP cost base in US
Expert:         taxman at centa.com
Date:           Sunday May 07, 2006
Time:           04:42 PM -0700
QUESTION:
I do not understand how form 8891 will help me (evetually) to determine RRSP
cost base for US tax purposes.
Would it be the balance of the plan on the first year it is reported??
(or more acurately: all plan contributions + all earnings before coming to
US + all earnings that where not tax deferred in US), right?
But that number is no-where on forms or in documents. Does it mean that we
need to keep all RRSP documents for the next 50 years to figure out the
adjust cost base when we start to annuiatize the RRSP.
I am not sure anyone keeps documents for so long.
------------------------------
david ingram replies:
For US purposes, the answer is easy.  It is the value of the plan when you
crossed the border.  Everything else is taxable on withdrawal if you have
filled in the form 8891 or the equivalent reporting from 1989 to 2003.
When you withdraw money though, it is a problem.  You do not just withdraw
earnings or principal as a rule.  Usually you withdraw what is considered a
"blended" payment where part is earnings (interest - dividends - capital
gains)  and part is principal.
And, LOTS of people keep very detailed records.
Remember that the same thing applies to a Mutual Fund account.  You have to
keep track of the ACB by adding the earnings to the original cost each year.
---------------------------------
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