RRSP and RRIF management as a US resident: withholding, treaty positions, and IRS reporting

Section 01The 60-second version

The following table maps the topic across the Canadian provincial side and the Florida / US-federal side.

The RRSP and RRIF stay open after a Canadian emigrates to the United States. Tax-deferred growth is preserved on the US side under Article XVIII paragraph 7 of the Canada-US Tax Convention, with the deferral election now automatic for eligible US persons under Revenue Procedure 2014-55 (Form 8891 was eliminated effective December 31, 2014). On distribution, Canada withholds at the non-resident rate: 25% on lump sums, reduced to 15% on periodic pension payments under Article XVIII paragraph 2. The full distribution is reported on the US 1040 as pension income, with the Canadian withholding claimed as a foreign tax credit on Form 1116 to prevent double taxation. The account is reported on FBAR (FinCEN Form 114) if the aggregate value of all foreign financial accounts exceeds USD 10,000 at any point during the year, and on Form 8938 if the FATCA thresholds are met. Form 3520 and Form 3520-A are NOT required for RRSP and RRIF (Rev. Proc. 2014-55 specifically exempted them). Contributions made after becoming a US resident invalidate the automatic deferral relief: the account should be put in pure custodial mode (no further contributions) effective on the departure date. Some US states, notably California, do not recognise the federal treaty deferral and tax accrued income annually at the state level.

Section 02Who this guide is for

This guide is for a Canadian who has ceased Canadian tax residency and become a US resident (typically in Florida), holding an RRSP, RRIF, LIRA, or LRIF account at a Canadian financial institution. The reader is asking what to do with the account: keep it, draw it down, leave it untouched, and how the US side reports it.

This guide is not for a Canadian still resident in Canada, for whom the standard Canadian RRSP/RRIF tax rules apply with no US dimension. It is also not for a US person who never resided in Canada and is wondering how to access Canadian retirement plans (a different fact pattern).

Section 03What stays the same after the move

Cross-border myths around RRSP and RRIF are persistent, so it is useful to anchor what does not change at the departure date.

The RRSP or RRIF remains a valid Canadian registered account. The Canadian financial institution continues to administer it under Canadian law. The investments inside the account continue to grow tax-deferred for Canadian purposes. There is no Canadian deemed disposition under section 128.1 of the Income Tax Act, because RRSP and RRIF are explicitly excluded from the deemed-disposition regime under section 128.1(4)(b)(iii) and related provisions.

The CRA continues to recognise the account holder as the beneficial owner. The Canadian financial institution may, however, impose internal restrictions on a non-resident client. Some institutions cease to allow new trades on registered accounts once the holder is non-resident (a Securities Commission rule that varies by province and by the institution's compliance posture). Confirming the institution's non-resident policy in writing before departure is more reliable than discovering the restriction after the move.

US tax law, by default, would treat the income earned inside an RRSP or RRIF as currently taxable to a US person (because the US does not, by default, recognise the foreign retirement plan's tax-exempt status). The Canada-US Tax Convention overrides the default through Article XVIII paragraph 7, which permits a US person to elect to defer US taxation on the plan's accrued growth until distribution. Revenue Procedure 2014-55 made the election automatic for eligible individuals.

The takeaway: the registered account is not a wasting asset that must be liquidated before departure. It continues to function, with the addition of US reporting obligations and a different distribution-tax framework.

Section 04Distribution mechanics: 25% versus 15%

When you take a distribution from an RRSP or RRIF as a Canadian non-resident, the Canadian financial institution withholds tax at source under Part XIII of the Income Tax Act. The headline rate is 25% of the gross distribution.

Article XVIII paragraph 2 of the Canada-US Tax Convention reduces the rate to 15% if the distribution qualifies as a periodic pension payment. The Income Tax Conventions Interpretation Act (section 5) defines "periodic pension payment" for Canadian treaty purposes. The CRA's Income Tax Folio S2-F1-C3 applies the definition to RRSP and RRIF distributions.

In practical terms:

Lump-sum RRSP withdrawal. A one-time withdrawal from an unmatured RRSP is not a periodic pension payment and is subject to the full 25% withholding under domestic Canadian rules. Treaty relief does not apply. A USD 100,000 lump-sum RRSP withdrawal generates approximately CAD 34,000 of withholding (CAD 136,000 gross at 25%, less the conversion).

RRIF periodic payments. An RRIF makes mandatory minimum periodic payments based on the holder's age. These payments qualify as periodic pension payments and are subject to 15% withholding under Article XVIII paragraph 2. The same RRIF in payout phase, taking USD 100,000 of periodic payments, generates approximately CAD 20,400 of withholding (CAD 136,000 gross at 15%).

RRIF lump-sum withdrawals beyond the minimum. A RRIF can pay out more than the minimum required amount, but only the minimum is treated as a periodic pension payment for Article XVIII paragraph 2 purposes. Withdrawals above the minimum are taxed at the 25% lump-sum rate on the excess. CRA Income Tax Folio S2-F1-C3 sets out the calculation.

Conversion of RRSP to RRIF. The conversion itself is not a taxable event. After conversion, distributions from the RRIF are treated under the RRIF rules above. Many cross-border movers convert their RRSP to a RRIF specifically to access the 15% periodic-payment rate (rather than the 25% lump-sum rate that an RRSP withdrawal would carry).

For the US side, the full distribution (gross, before Canadian withholding) is reported as pension income on the 1040, line 5a/5b (pensions and annuities). The Canadian withholding is claimed as a foreign tax credit on Form 1116 (with the distribution categorised as passive or general category income depending on facts). The credit eliminates most or all of the US tax on the distribution, leaving the taxpayer with the Canadian withholding as the effective tax cost.

The takeaway: withdrawing from an RRSP as a US-resident lump sum costs 25% Canadian withholding. Converting to a RRIF and taking periodic payments cuts the rate to 15%. The structure of the withdrawal, not just the amount, drives the cost.

Section 05US reporting: what is required and what is not

The US reporting framework for RRSP and RRIF held by US persons has been progressively simplified since 2014. The current state:

Form 8891. Eliminated effective December 31, 2014, by Revenue Procedure 2014-55. Do not file. Do not search for it on IRS.gov. The deferral election it used to carry is now automatic for eligible US persons.

Form 3520 (Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts). Not required for RRSP and RRIF under Rev. Proc. 2014-55 section 5. The account is exempted from foreign-trust reporting by name.

Form 3520-A (Annual Information Return of Foreign Trust With a U.S. Owner). Not required for RRSP and RRIF, same authority.

Form 8938 (Statement of Specified Foreign Financial Assets, FATCA). Required if the FATCA reporting threshold is met. For unmarried filers residing in the US, the threshold is USD 50,000 of specified foreign financial assets on the last day of the year, or USD 75,000 at any time during the year. Higher thresholds apply for married filing jointly and for taxpayers residing abroad. The RRSP and RRIF are reportable as specified foreign financial assets if held directly by the US person.

FBAR (FinCEN Form 114). Required if the aggregate value of all foreign financial accounts exceeds USD 10,000 at any point during the calendar year. The threshold is on the aggregate, not per account. The RRSP and RRIF are foreign financial accounts for FBAR purposes. Filing is electronic via the BSA E-Filing System, with a filing deadline of April 15 of the following year (with an automatic extension to October 15).

Form 1116 (Foreign Tax Credit). Filed in the year a distribution is taken from the RRSP or RRIF, to claim credit for the Canadian withholding tax against US tax on the distribution.

State-level reporting. Most US states follow the federal treaty position. California is the principal exception: it does not recognise the federal treaty deferral and treats RRSP and RRIF as currently taxable foreign trusts at the state level. Florida does not have a state income tax, so the issue does not arise for a Florida-resident holder.

The takeaway: the US filing burden for RRSP and RRIF is concentrated in two recurring forms (FBAR and Form 8938) and one trigger-event form (Form 1116 in years with distributions). The filings the cross-border community used to associate with foreign-account paranoia (Form 3520, Form 3520-A, Form 8891) do not apply to RRSP and RRIF specifically.

Section 06The contribution trap

The automatic Article XVIII paragraph 7 deferral applies only to "eligible individuals" as defined in Revenue Procedure 2014-55. One of the criteria is that the US person must not have made contributions to the plan after becoming a US resident.

Practical consequence: a Canadian who contributes to their RRSP after the departure date risks losing the automatic deferral for that year and onward. The default outcome is that the income earned inside the plan becomes currently taxable to the US person, defeating the entire point of treaty deferral.

The clean approach: stop all RRSP contributions on the departure date. Cancel any pre-authorised contribution plans with the Canadian financial institution. The account remains open and continues to grow tax-deferred for Canadian and US purposes, but no new contributions enter the account.

A separate but related trap: making a contribution before the departure date but in respect of services performed after the date. Article XVIII paragraph 8 of the Convention permits cross-border contribution recognition in some employer-sponsored arrangements, but the cleaner rule for a permanent emigrant is to make no Canadian RRSP contributions in the year of departure (or only contributions that relate strictly to pre-departure compensation).

The takeaway: post-departure contributions invalidate the automatic deferral. The account is a custodial vessel from the departure date onward.

Section 07Worked example

A Canadian (age 64) emigrates to Florida in March, with the following retirement-account profile:

• RRSP: CAD 850,000 (held at a major Canadian bank).
• LIRA: CAD 200,000 (held at the same institution, locked-in from a former employer pension).
• TFSA: CAD 95,000 (held separately; not the subject of this guide).

The departure date is March 31. From April 1 onward, the holder is a US tax resident.

On the day after departure. The institution is notified of the change of residency. Pre-authorised RRSP contributions are cancelled. The account is converted to a US-address record (with a Florida address) and the institution flags the file for non-resident handling. No new contributions are made.

At age 65 (the conversion year). The RRSP is converted to an RRIF. The conversion is not a taxable event. The LIRA is converted to a LRIF (the locked-in equivalent). Both accounts begin paying minimum annual amounts based on age-prescribed factors.

Annual distributions from age 65 onward. Suppose the RRIF pays CAD 45,000 in periodic payments (the prescribed minimum). The Canadian financial institution withholds 15% under Article XVIII paragraph 2 (CAD 6,750), remits to the CRA, and pays the holder CAD 38,250 net. The institution issues an NR4 information slip at year-end, reporting the gross amount and the withholding.

On the US 1040 for the year of distribution: the holder reports CAD 45,000 (converted to USD at the appropriate rate) as pension income on line 5b. The Canadian CAD 6,750 withholding is claimed on Form 1116 as a foreign tax credit. Assuming a US marginal rate of, say, 22%, the US tax on the converted USD amount is approximately USD 7,260. The foreign tax credit of approximately USD 4,950 (the Canadian withholding) reduces the US tax to approximately USD 2,310. The total tax burden is the Canadian 15% plus the residual US tax, structurally aligned with the holder's US marginal rate.

Annual reporting. FBAR (FinCEN 114) lists the RRIF and LRIF (and the bank account that received the distribution) at their highest balance during the year. Form 8938 lists the same accounts, with the cost-basis and income lines populated.

At any age below 71. If the holder converts the RRSP to RRIF before age 71, periodic payments are still treated as periodic pension payments under Article XVIII paragraph 2 only to the extent of the prescribed minimum. Distributions above the minimum are subject to 25% Canadian withholding on the excess.

Section 08Common mistakes

Filing Form 8891. The form was eliminated in 2014. Filing it now is meaningless and may confuse IRS systems. Skip it.

Filing Form 3520 or Form 3520-A for RRSP or RRIF. These forms are not required for RRSP or RRIF specifically (Rev. Proc. 2014-55 exemption). Filing them voluntarily creates compliance noise without benefit, and the penalty regime under section 6677 makes any error on a non-required form unnecessarily risky.

Skipping FBAR or Form 8938. These remain mandatory if thresholds are met. The RRSP and RRIF count toward the FBAR USD 10,000 aggregate threshold. Penalties for non-filing are substantial (USD 12,921 per account for non-wilful FBAR violations in 2026 dollars, and far more for wilful violations).

Making post-departure RRSP contributions. Invalidates the automatic Article XVIII paragraph 7 deferral and exposes the holder to current US tax on plan growth. Cancel pre-authorised contribution plans on or before the departure date.

Withdrawing from an RRSP (not RRIF) as a lump sum. The 25% withholding is the rule, treaty relief does not apply. Convert to a RRIF first if periodic-payment treatment is desired.

Assuming the foreign tax credit will fully eliminate US tax. The foreign tax credit limitation under section 904 of the Internal Revenue Code can result in residual US tax on the distribution, particularly for high-income taxpayers in higher US brackets. Run the Form 1116 limitation calculation rather than assuming.

Holding RRSP and RRIF in California. California does not recognise the federal treaty deferral. California-resident holders pay state tax annually on accrued plan income, generating a tax cost that does not exist for Florida holders. Florida being a no-state-income-tax jurisdiction, this trap does not apply, but it matters for Canadians considering relocation to a state other than Florida.

Forgetting NR4 slips. The Canadian institution issues an NR4 each year a distribution is paid. Track these for the Form 1116 computation. Missing NR4s lead to the Canadian withholding being uncredited on the US side, which is a quietly expensive mistake.

Section 09Step-by-step checklist

Before departure

1. Confirm the Canadian financial institution's policy on non-resident clients in writing.
2. Cancel all pre-authorised RRSP contribution plans effective on the departure date.
3. Update the address on file with the institution and on CRA records to the new US address.
4. Apply for an ITIN if no SSN, in advance of US 1040 filing.

Within 30 to 60 days after departure

1. Confirm to the Canadian institution that you are a US resident and have ceased Canadian residency.
2. Update beneficiary designations if needed (cross-border estate planning).

Each tax year as a US resident

1. File the US 1040 reporting any RRSP or RRIF distributions on line 5a/5b.
2. File Form 1116 for foreign tax credit on the Canadian withholding.
3. File FBAR (FinCEN 114) if the foreign-account aggregate exceeds USD 10,000 at any point.
4. File Form 8938 with the 1040 if FATCA thresholds are met.
5. Do not file Form 8891. Do not file Form 3520 or Form 3520-A for RRSP or RRIF.

At age 71 (mandatory RRSP-to-RRIF conversion year)

1. Confirm conversion of the RRSP to a RRIF before December 31 of the year the holder turns 71.
2. The institution typically initiates the conversion automatically; confirm the conversion completed and the account number is updated.

Section 10FAQ

Q. Can I keep contributing to my RRSP from Florida?

A. No. Post-departure contributions invalidate the automatic Article XVIII paragraph 7 deferral and may also create CRA issues if the contributor has no Canadian earned income. Stop contributions on the departure date.

Q. Should I draw down my RRSP before leaving Canada to avoid the cross-border complexity?

A. Almost never. Drawing down before departure means full Canadian marginal-rate tax on the withdrawal. The US-resident periodic-payment rate of 15% on a converted RRIF is structurally more efficient than top Canadian marginal rates. The complexity of cross-border RRSP management is well-documented and routine for cross-border tax advisors.

Q. Do I need a US bank account to receive RRSP or RRIF payments?

A. The Canadian institution can wire CAD payments to a Canadian account, which the holder then converts to USD at their preferred FX provider. Some institutions can wire USD directly. The mechanics are administrative and do not affect the treaty position.

Q. What happens to my RRSP if I die as a US resident?

A. The RRSP becomes part of the holder's Canadian estate, subject to Canadian deemed-disposition rules (the entire RRSP is included in the deceased's final-year income unless rolled over to a surviving spouse or dependent child). On the US side, the RRSP is part of the gross estate for US estate tax purposes, with treaty relief available under Article XXIX-B for US-resident decedents. Cross-border estate planning is a separate analysis: the Canadian will while in Florida guide covers the estate-planning architecture.

Q. Is California really worse than Florida for RRSP holders?

A. Yes, materially. California does not recognise the federal Article XVIII paragraph 7 deferral and taxes accrued plan income annually as part of California taxable income. Florida has no state income tax, so the federal treatment is the only treatment that applies. The state-level differential can be significant for large RRSP balances over multi-year holds.

Q. Can I roll my RRSP into a US IRA?

A. No. There is no rollover provision between an RRSP and a US IRA. The accounts are separate retirement vehicles in separate countries with no cross-border transfer mechanism. The holder maintains the RRSP/RRIF on the Canadian side and any US IRA on the US side, each under its own rules.