# Account type for RRSP in FBAR



## Incheo99

I filed TD F90-22.1 and I clicked "Other" and typed RRSP in the space followed. I read a posting regarding the account type for RRSP in the form (item 16), which stated that all RRSP are considered "securities" so one should click "securities" for the box 16. My question is: should I file an amended TD F-22.1 to correct this?

Huge thanks.


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## Bevdeforges

I would not bother filing an amended FBAR for a classification issue like that. Just report it that way on next year's filing. (If they don't understand what you meant by Other - RRSP, they'll be in touch, but all it will take is a brief note to explain.)
Cheers,
Bev


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## Incheo99

Bevdeforges said:


> I would not bother filing an amended FBAR for a classification issue like that. Just report it that way on next year's filing. (If they don't understand what you meant by Other - RRSP, they'll be in touch, but all it will take is a brief note to explain.)
> Cheers,
> Bev


Thank you very much, Bev!
You are always helpful!


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## expat1133

Incheo99 said:


> I filed TD F90-22.1 and I clicked "Other" and typed RRSP in the space followed. I read a posting regarding the account type for RRSP in the form (item 16), which stated that all RRSP are considered "securities" so one should click "securities" for the box 16. My question is: should I file an amended TD F-22.1 to correct this?
> 
> Huge thanks.



just read in dated 26-Jul-2013, in IRS website 

Report of Foreign Bank and Financial Accounts (FBAR)

irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts

under

Who Must File an FBAR, Exceptions to the Reporting Requirement, item 7

7. Participants in and beneficiaries of tax-qualified retirement plans;

it seems to say that for RRSP there is no need to file FBAR, is this true? thanks,


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## danocanada

expat1133 said:


> just read in dated 26-Jul-2013, in IRS website
> 
> Report of Foreign Bank and Financial Accounts (FBAR)
> 
> irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts
> 
> under
> 
> Who Must File an FBAR, Exceptions to the Reporting Requirement, item 7
> 
> 7. Participants in and beneficiaries of tax-qualified retirement plans;
> 
> it seems to say that for RRSP there is no need to file FBAR, is this true? thanks,


would love an answer to this myself


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## DavidMcKeegan

Unfortunately there is not really a hard and fast rule when it comes to what needs to be reported on an FBAR. Although many feel they don't need to be reported, the most conservative approach would be "If you can access the funds and withdraw at any point" then report it on the FBAR. 

Also, if applicable, you should make sure that the "yes" box is checked for question 8 on Schedule B (During 2013, did you receive a distribution from, or were you the grantor of, or transferor to, a foreign trust?). RRSP's are often considered a foreign trust.

I hope this helps.


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## maz57

As is quite often the case, the IRS instructions are murky and getting murkier. When they talk about tax-qualified I think it's safe to assume they mean US tax-qualified, not some other country tax-qualified otherwise they'd say so. In the case of a Canadian RRSP, that US tax qualification was previously accomplished by submitting a Form 8891 for each RRSP every year along with one's 1040.

The latest rules have eliminated Form 8891 and the RRSP must presumably now be reported on Form 8938 along with all other things foreign, but the IRS has not specifically said that to the best of my knowledge. (Reporting RRSPs on Form 8891 previously eliminated the need to include them on Form 8938 according to the 8938 instructions.) For expats, the Form 8938 threshold is 200k (300k joint) so below the threshold they definitely won't be reported at all. Perhaps the 2014 8938 instructions (not out yet) will clarify this. Who knows?

The Canada/US IGA exempts RRSPs (as well as other Canadian registered accounts) from reporting under FATCA. I take this to mean the IRS has finally conceded these accounts are not likely to be a vehicle for tax evasion, but they haven't said they are not reportable (and taxable) on one's US tax return. Now here's the weird thing: contributions and withdrawals to RRSPs were previously tracked via Form 8891 for US tax purposes. Although you didn't get a deduction from income (and thus US tax) for a contribution, at least you only paid tax on the gains upon withdrawal. With the elimination of Form 8891 that tracking is gone so now what? Is the IRS going to tax everything upon withdrawal? (Remember you've already paid US tax on those contributions.) Or only tax the gains? How do you even determine what the gain is? Or you decide how much is gain and only report that to the IRS? The IRS is totally silent on all of these questions. Just like Alice, it gets curiouser and curiouser. 

With respect to checking "yes" on question 8, Schedule B, if one checks yes presumably they should also show up on ones FBAR, right? But if they are exempt from reporting under FATCA because the IRS isn't interested in them why bother? The IRS will only know about them if you tell them. Are they suggesting "selective" compliance? No one seems to know and the IRS is offering no guidance whatsoever.


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## BBCWatcher

I don't think the IRS is silent. RRSPs no longer have a dedicated form, true, but you'd still treat them the same as any other non-U.S. foreign tax-advantaged account (with a tax treaty in the middle). Yes, they'd be reportable on Form 8938 ("FATCA"), for example. Why wouldn't they be?


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## maz57

BBCWatcher said:


> I don't think the IRS is silent. RRSPs no longer have a dedicated form, true, but you'd still treat them the same as any other non-U.S. foreign tax-advantaged account (with a tax treaty in the middle). Yes, they'd be reportable on Form 8938 ("FATCA"), for example. Why wouldn't they be?


Well, if the IRS is not silent on how Canadian RRSPs should now be handled on a US tax return, please point me to their clear instructions on the subject. To be fair, 8938 instructions for 2014 haven't yet been issued and some of these questions may be answered when they are, (or not).

Look, the IRS has many Canadians stirred up with their ridiculous treatment of registered accounts. These Canadian government gifts to taxpayers are practically sacred in Canada; everybody has them. The RRSP is/was the poster boy for the harsh IRS treatment of what are very common and benign retirement/ savings vehicles for Canadians. Form 8891 was supposed to fix this harsh treatment but in typical IRS fashion it created more problems than it solved so I can see why they dropped it. The total screwing that many Canadians received at the hands of the IRS after being pushed into OVDI by their so-called US tax experts has created the climate in which the IRS now operates in Canada....a nasty combination of total distrust and loathing.

In the announcement that eliminated 8891 they could have said "RRSPs will now be reported by.....blah,blah,blah", but instead they chose to keep it a complete mystery. You yourself have said "read the instructions exactly-don't assume, don't guess". In this case to date there are none to read.

It may be logical to you that RRSPs should now be reported on 8938, but it's just as logical to me that an account that is exempt from FATCA reporting under the IGA would not need to be reported on an 8938 ("FATCA") form because the IRS is not interested in them. It's nothing but speculation on both our parts. The mere fact we are having this discussion shows there is a dearth of clear information.


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## BBCWatcher

Are you a party to any intergovernmental agreement? I don't know why you keep bringing that up. IGAs have absolutely no relevance to your personal tax and financial reporting.

Just handle an RRSP just as you would a WXYZ or an LMNOP non-U.S. foreign tax-advantaged account held in Treatystan. There's a U.S.-Canada tax treaty. If the tax treaty says anything about RRSPs, great, follow that. Otherwise, treat the account generically like every other non-U.S. account of similar composition. If it's a PFIC treat it as a PFIC. If it's a trust treat it as a trust. And so on.

The IRS doesn't say anything _specifically_ about Singapore Supplementary Retirement Scheme (SRS) accounts either, but they don't need to. It's a non-U.S. local tax-advantaged account, there is no treaty provision, and thus it's just another foreign account. If that SRS is invested in foreign mutual funds then it's (almost certainly) a PFIC, for example. Of course it's FBAR/FATCA reportable. (The funds are individually held and individually controlled. It's defined contribution, not defined benefit. No question it's reportable.)

If that means your RRSP is Canadian tax-advantaged but U.S. taxable, so be it. That outcome wouldn't be particularly unusual or particularly surprising if so. There's no such thing as a global (or even substantially multinational) tax-advantaged retirement savings account. Japan would tax a Singaporean SRS, to pick a random example. (And Japan often does non-residentially if the SRS is inherited.)

Whether you like that outcome for your RRSP or not is a separate question. If you don't like it, one option is to ask the Canadian government to reopen tax treaty negotiations with the United States. Another option is to choose U.S. tax-advantaged accounts if possible and if the Canadian tax authorities respect their tax advantages. (That'd include U.S. municipal bonds if Canada respects them. Those are U.S. tax free, and there are no particular obstacles to buying them. You don't need earned income outside the FEIE/FHE, for example.) A third option is to pay US$2350 and the U.S. exit tax (if applicable) and terminate U.S. citizenship and tax liability on RRSPs if it exists. A fourth option is to break the law, though no one (including me) should be recommending that.


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## Bevdeforges

Just another "dissenting" opinion, but when it comes to complying with tax requirements, I've always taken the stance that the main thing you want to do is disclose. If there is any doubt about the specifics of what form to file, or how and whether taxes are due, the main thing is to have disclosed the existence of the item (in this case, the account - and that you can do on your FBAR filing). That way, if the IRS decides at some point that taxes or further reporting are due, they can't accuse you of willfully concealing the relevant information. If they have further questions, they will get back to you.
Cheers,
Bev


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## BBCWatcher

FBAR (FinCEN Form 114) isn't a filing with the IRS. No points are awarded if you send your Canadian tax return to the Royal Canadian Mounted Police either. Governments get to decide where and how you're supposed to send your reports. "But I sent my request for an immigration visa to the Federal Aviation Administration" is not actually a viable defense.

However, IRS Form 8833, to pick a notable example, would at least be a form associated with the _correct agency_.


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## maz57

BBCWatcher said:


> Are you a party to any intergovernmental agreement? I don't know why you keep bringing that up. IGAs have absolutely no relevance to your personal tax and financial reporting.


Nope, except in the sense that I happen to live in a country that has signed one. The reason I keep bringing it up is although most of the IGA is standard off-the-shelf stuff the Canada/US agreement uniquely exempts all the Canadian "registered" i.e. tax sheltered accounts from FATCA reporting. I have not heard of any other country that has such an exemption in their agreement.

The Canadian government has offered no explanation beyond the initial announcement. The IRS has said nothing but they did eliminate Form 8891 shortly after the signing so that could be related to the IGA provisions or it could be simply a coincidence. But there is some reason those accounts were exempted from FATCA. A few guesses:

1. Save the Canadian banks (and the IRS) a lot of useless work.

2. Make the Canadian politicians look like "tough" negotiators when in fact, they caved like the politicians everywhere else. (The corollary being making the IRS look friendly and reasonable to Canadians.)

3. The IRS has an unofficial "hands off" policy on these accounts because they don't want to step into a political minefield. There are already horror stories circulating about Canadians who have been screwed by the strict application of IRS rules on these accounts. The IRS doesn't need any more bad press and secretly wishes the whole problem would just go away.

4. It's an anomaly the IRS agreed to knowing full well they would still continue to tax them as usual.


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## maz57

BBCWatcher said:


> Just handle an RRSP just as you would a WXYZ or an LMNOP non-U.S. foreign tax-advantaged account held in Treatystan. There's a U.S.-Canada tax treaty. If the tax treaty says anything about RRSPs, great, follow that. Otherwise, treat the account generically like every other non-U.S. account of similar composition. If it's a PFIC treat it as a PFIC. If it's a trust treat it as a trust. And so on.


A Canadian RRSP is definitely a trust so foreign trust reporting is necessary. RRSPs often contain PFICs. Whether that would also trigger PFIC reporting if they are contained in a trust, who knows. Form 8891 was created to solve and simplify all these issues so eliminating it amounts to a step backwards. It's hard to imagine what the IRS has on it's mind; I wish they'd tell us. The treaty doesn't mention RRSPs or any other registered account.


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## maz57

BBCWatcher said:


> Whether you like that outcome for your RRSP or not is a separate question. If you don't like it, one option is to ask the Canadian government to reopen tax treaty negotiations with the United States. Another option is to choose U.S. tax-advantaged accounts if possible and if the Canadian tax authorities respect their tax advantages. (That'd include U.S. municipal bonds if Canada respects them. Those are U.S. tax free, and there are no particular obstacles to buying them. You don't need earned income outside the FEIE/FHE, for example.) A third option is to pay US$2350 and the U.S. exit tax (if applicable) and terminate U.S. citizenship and tax liability on RRSPs if it exists. A fourth option is to break the law, though no one (including me) should be recommending that.


Option 2 is a non-starter. I tried to open a simple savings/chequeing account in the US because I thought it would be handy. I was refused. Why? "You don't live here; you live in Canada, a foreign country. Sorry." An investment account is a virtual impossibility. (Maybe it's different for high net worth individuals.)

Option 3 is the route many Canadians are presently choosing. The waiting lists at Consulates across the country are the proof of that.

Option 4 is the route many other Canadians without the dreaded US birthplace are choosing.


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## Nononymous

maz57 said:


> Option 4 is the route many other Canadians without the dreaded US birthplace are choosing.


And also Canadians with the dreaded US birthplace. (Photoshop can fix that.)


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## BBCWatcher

maz57 said:


> Option 2 is a non-starter. I tried to open a simple savings/chequeing account in the US because I thought it would be handy. I was refused.


You have to shop around a bit. There are other threads with lists of financial institutions that allow non-U.S. resident U.S. citizens to open accounts. Last I checked (fairly recently) the credit unions that primarily serve highly internationally mobile U.S. government employees were/are very easy to do business with, to give you a broad hint.

By the way, U.S. municipal bonds are (generally) free of U.S. federal income tax. However, upon further checking, it seems Canada taxes U.S. municipal bond interest. Those evil Canadians.


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## maz57

I've since found other Canadian based options that address the convenience factor. For a permanent expat (i.e., never returning to the US except to visit) investing in tax exempt US products is an unnecessary complication and my guess is that Canada will happily tax them anyway. 

In the end, it seems that which one government doesn't tax the other one does. 

The Canadian RRSP/RRIF (RRSP turns into a RRIF once mandatory withdrawals start) was the sole exception and now that has apparently gone away. But there is good news; you no longer have to file that extra piece of paper!


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## Nobledreamer

maz57 said:


> With respect to checking "yes" on question 8, Schedule B, if one checks yes presumably they should also show up on ones FBAR, right? But if they are exempt from reporting under FATCA because the IRS isn't interested in them why bother? The IRS will only know about them if you tell them. Are they suggesting "selective" compliance? No one seems to know and the IRS is offering no guidance whatsoever.


The issue of not reporting Canadian tax-deferred registered accounts *only applies to the banks.* You raise a very good question concerning the tracking of RRSP pmts. The elimination of 8891 also will confuse taxpayers. As Roy Berg has pointed out, many will assume they don't have to be reported and this is certain to trigger penalties. If aggregate amounts of any foreign accounts match or exceed thresholds, they have to be reported regardless of what they are; savings, chequeing, TFSA, RRSP, RESP, RDSP etc.
Of course for FBAR that figure remains at $10k and for 8938 depends.....

If PFICs are within an RRSP, they are supposed to be ok. No 8621.


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