# declare rrsp?



## deannw

S if i have Spousal RRSP and my husband is the contributor with me as the annuitant do i have to declare anything on form 8891. We dont cash any in just renew every couple years? thanks for any input


----------



## Guest

Yes, you have to request an election for RRSP deferral on form 8891. But be careful...in my case I contribute and I am the beneficiary to RRSP, therefore technically I am the annuitant AND the beneficiary. IF I check the box on the 8891 as ANNUITANT there are other forms I must fill out...therefore, most people in my situation just check the box for BENEFICIARY.

See this information for a better explanation;

IRS Releases Final Version RRSP/RRIF Information Return

Another excerpt;

_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.
_


----------



## Peg

For me, I chose to report the Spousal RRSP where my husband contributes since the RRSP is in my name.

If someone is Beneficiary on an RRSP, they cannot control it and the account owner could change the beneficiary at any time.


----------



## Guest

What Peg says is 100% true.

I might have given too much information, but I was referring to the 8891 election, on which how to file this form if you are both the annuitant and beneficiary.

In hindsight, I am not sure if you have to fill out an 8891 as you do not technically have signature authority over this account (?).

Might want to talk to an Accountant.


----------



## Guest

Mach7 said:


> What Peg says is 100% true.
> 
> I might have given too much information, but I was referring to the 8891 election, on which how to file this form if you are both the annuitant and beneficiary.
> 
> In hindsight, I am not sure if you have to fill out an 8891 as you do not technically have signature authority over this account (?).
> 
> Might want to talk to an Accountant.


Question: doesn't signature authority have to do with FBAR whereas 8891's are required as part of filing the 1040 return?


----------



## Peg

nobledreamer said:


> Question: doesn't signature authority have to do with FBAR whereas 8891's are required as part of filing the 1040 return?


Yes. From what I know, FBARs include any account over which you have a financial interest or signing authority; as long as the total of those accounts is $10,000 you submit FBAR. 8891 is the form to be included with your 1040 when you want to designate a RRSP as tax deferred. There is no minimum for the 8891.

If your spouse has put money into a Spousal RRSP, in my opinion, you should report it on both the FBAR and the 8891 which is part of the 1040.

If you have contributed to a Spousal RRSP, in my opinion, you do not include it on either your FBAR or your 1040 since you have no control over the money even if you are beneficiary.

Theoretically, one could be a beneficiary on an RRSP and not know it which is why I do not think they should be included in these forms --- it is not until you actually become a beneficiary that you would have any control over the money.


----------



## Peg

Peg said:


> Theoretically, one could be a beneficiary on an RRSP and not know it which is why I do not think they should be included in these forms --- it is not until you actually become a beneficiary that you would have any control over the money.


To me, designate a beneficiary means to list someone as beneficiary on a rrsp.

To become a beneficiary, the account holder would have to die and therefore leave the money to the beneficiary --- it would only be at that point that a beneficiary would have any actual financial interest or control over the rrsp monies.


----------



## Guest

Peg said:


> Yes. From what I know, FBARs include any account over which you have a financial interest or signing authority; as long as the total of those accounts is $10,000 you submit FBAR. 8891 is the form to be included with your 1040 when you want to designate a RRSP as tax deferred. There is no minimum for the 8891.
> 
> Theoretically, one could be a beneficiary on an RRSP and not know it which is why I do not think they should be included in these forms --- it is not until you actually become a beneficiary that you would have any control over the money.


Thanks Peg.

That really does make sense and is the first statement that does answer my question about whether or not I have to list my husband's RRSP's on my FBAR since I am the beneficiary......just trying to make sure of everything. 
No errors allowed!


----------



## Peg

nobledreamer said:


> Thanks Peg.
> 
> That really does make sense and is the first statement that does answer my question about whether or not I have to list my husband's RRSP's on my FBAR since I am the beneficiary......just trying to make sure of everything.
> No errors allowed!


Bear in mind that I have had NO professional advice on this matter!


----------



## Guest

Peg said:


> Bear in mind that I have had NO professional advice on this matter!


That's ok! After all, you've already been proclaimed as the one to translate IRS-speak.... :nod:


----------



## KalC

nobledreamer said:


> Thanks Peg.
> 
> That really does make sense and is the first statement that does answer my question about whether or not I have to list my husband's RRSP's on my FBAR since I am the beneficiary......just trying to make sure of everything.
> No errors allowed!


I can see why you are confused. Even the IRS has admitted to a tax practitioner that it is confusing. Here is the skinny.

The 'beneficiary' is the person who benefits from the RSP when he/she starts to draw it down. Normally this is the contributor . For a spousal RSP it is the person who would withdraw funds on retirement or maturity.

The 'beneficiary' is NOT the person to whom an RSP can be transferred tax free if the original owner passes on. (Normally surviving husband or wife)

Once the owner/beneficiary of the RSP starts to draw it down (either by choice or because he/she has reached 71), he/she becomes the 'Annuitant"

The beneficiary must report the gain in value of an RSP unless he elects to defer tax using form 8891. Unfortunately, 8891 may not be useful if it is filed late.

If you are the annuitant, you do NOT have to report undistributed earnings during the year. Instead you would report the amount withdrawn, all of which is normally taxable in both Canada and the US, and for which you get a credit on the 1040 for any taxes paid in Canada. Normally this would not result in any US tax owing.

Sorry if this still isn't clear. I'm an amateur in these affairs.


----------



## Guest

KalC said:


> I can see why you are confused. Even the IRS has admitted to a tax practitioner that it is confusing. Here is the skinny.
> 
> The 'beneficiary' is the person who benefits from the RSP when he/she starts to draw it down. Normally this is the contributor . For a spousal RSP it is the person who would withdraw funds on retirement or maturity.
> 
> The 'beneficiary' is NOT the person to whom an RSP can be transferred tax free if the original owner passes on. (Normally surviving husband or wife)
> 
> Sorry if this still isn't clear. I'm an amateur in these affairs.



Thank you KalC. This is exactly what I needed to understand. I understood about 8891 and so on but was totally mystified as to FUBAR and "beneficiary."

You were very clear! :clap2:


----------



## Peg

KalC said:


> I can see why you are confused. Even the IRS has admitted to a tax practitioner that it is confusing. Here is the skinny.
> 
> The 'beneficiary' is the person who benefits from the RSP when he/she starts to draw it down. Normally this is the contributor . For a spousal RSP it is the person who would withdraw funds on retirement or maturity.
> 
> The 'beneficiary' is NOT the person to whom an RSP can be transferred tax free if the original owner passes on. (Normally surviving husband or wife).


I disagree with you KalC on the beneficiary. When I opened my RRSP I had to designate a beneficiary for the RRSP to be transferred to if I died. Online I found an application for one of the major Canadian banks:
*
Planholder's (Annuitant's) Information:* (if this were my account, it would be my name)

Near the end of the form: 
*Designation of a Beneficiary - Optional*
In some provinces or territories, a person can transfer property after his/her death to another person only by means of a will. In other provinces or territories, the law permits the Planholder to name a beneficiary who will receive the assets of the Plan after his or her death by completing a beneficiary designation such as this. You should consult with a legal advisor to ensure that your province or territory permits a beneficiary designation.

---


From Designating Beneficiaries for RRSPs and RRIFs | ProfessionalReferrals.ca - Financial Advisor, Estate Planning, Insurance, Mortgage Broker. : _That being said, anyone can be named the beneficiary. Most often, it is the spouse, children or the estate that are named but it does not have to be that way._ This link also says that (my paraphrasing): _The RRSP can only transfer tax-free to a spouse or a financially dependent child or grandchild._


----------



## Peg

nobledreamer said:


> That's ok! After all, you've already been proclaimed as the one to translate IRS-speak.... :nod:


Definitely not able to translate IRS-speak --- however, I do know about RRSP-speak and therefore my interpretations relate to the Canadian rules. 

The information that KalC provided is wrong in relation to Canadian rules.


----------



## KalC

Peg said:


> Definitely not able to translate IRS-speak --- however, I do know about RRSP-speak and therefore my interpretations relate to the Canadian rules.
> 
> The information that KalC provided is wrong in relation to Canadian rules.


I may be wrong in relation to Canadian rules. However , I am correct in explaining 8891.


The IRS uses beneficiary in a different way as i mentioned in my post. The IRS uses it to mean the person who benefits from, owns, retires with, can convert to RRIF etc as opposed to the person who inherits a RSP as a tax free rollover from their spouse. 

Read the instructions carefully and figure out why they use the terms beneficiary and annuitant and why those terms have lead to confusion..


----------



## KalC

Peg said:


> I disagree with you KalC on the beneficiary. When I opened my RRSP I had to designate a beneficiary for the RRSP to be transferred to if I died. Online I found an application for one of the major Canadian banks:
> *
> Planholder's (Annuitant's) Information:* (if this were my account, it would be my name)
> 
> Near the end of the form:
> *Designation of a Beneficiary - Optional*
> In some provinces or territories, a person can transfer property after his/her death to another person only by means of a will. In other provinces or territories, the law permits the Planholder to name a beneficiary who will receive the assets of the Plan after his or her death by completing a beneficiary designation such as this. You should consult with a legal advisor to ensure that your province or territory permits a beneficiary designation.
> 
> ---
> 
> 
> From Designating Beneficiaries for RRSPs and RRIFs | ProfessionalReferrals.ca - Financial Advisor, Estate Planning, Insurance, Mortgage Broker. : _That being said, anyone can be named the beneficiary. Most often, it is the spouse, children or the estate that are named but it does not have to be that way._ This link also says that (my paraphrasing): _The RRSP can only transfer tax-free to a spouse or a financially dependent child or grandchild._


in canada beneficiary refers to _after your death._ As far as thr IRS are concerned , beneficiary means_ owner of the account_. Two different meanings of the same word. Cheers.


----------



## Guest

_The IRS uses beneficiary in a different way as i mentioned in my post. The IRS uses it to mean the person who benefits from, owns, retires with, can convert to RRIF etc as opposed to the person who inherits a RSP as a tax free rollover from their spouse. _

KalC is correct on this. In fact, if you read a lot of tax blogs, they state that when filling out the 8891 form MAKE SURE YOU CHECK OFF THE BENEFICIARY box and not the ANNUTITANT box in order to qualify for the RRSP deferral election


----------



## Peg

Thank you for the clarifications!!!

This explains my confusion on why people were reporting RRSPs where they were the beneficiary. In Canadian terms that means you get the money after the account holder dies whereas US it means the account owner who can access the money anytime. 

No wonder most people pay to have their 1040s completed!


----------



## Peg

Mach7 said:


> _The IRS uses beneficiary in a different way as i mentioned in my post. The IRS uses it to mean the person who benefits from, owns, retires with, can convert to RRIF etc as opposed to the person who inherits a RSP as a tax free rollover from their spouse. _
> 
> KalC is correct on this. In fact, if you read a lot of tax blogs, they state that when filling out the 8891 form MAKE SURE YOU CHECK OFF THE BENEFICIARY box and not the ANNUTITANT box in order to qualify for the RRSP deferral election


Just doublechecked my 8891s and was relieved to see that I did tick Beneficiary --- didn't remember that at all...


----------

