SFCanadian wrote:

- quote -

No. Interest and dividend income has its source at the
residence of the owner of the intangibles that generate it.
If you were a nonresident of California when the income was
earned, it won't be subject to California tax when you
withdraw it, even if you are a CA resident at that time. Of
course from the time you become a CA resident, the earnings
of the fund will be subject to CA tax as they accrue.

Just think of it as a passbook savings account that you
created, and which accrued interest income, while you were a
nonresident of California.

Katie in San Diego

The foregoing is intended for educational purposes and does
not constitute legal or professional advice.

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Katie,

I think you've hit on it. My RRSP trustee (a Canadian bank)
has locked up my account for as long as I'm in the US. They
said that it had something to do with the state I was in and
if I altered my asset mix, it would be considered a sale of
assets and I would have to pay for any gains (capital,
etc.).

So from what you seem to be saying: Keep my RRSP as it is
until I retire and then I'll be able to withdraw from my
account without tax. My only last question is: When I do
retire, if I live in California, while the withdrawal won't
be taxable, will the earnings that I accumulated over all
those years be taxable?

Thanks a ton,
Jamie

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elgie[at]gmail.com wrote:

- quote -

I would suggest you read notices 2003-75, 2003-57, 2003-25
and Rev. Proc. 2002-23. All available at the IRS web site.
I haven't read 2003-57 and 2003-25 but they are cited by CCH
as mentioning Rev. Proc. 2002-23.

Good luck and welcome to the US.

--
Drew Edmundson

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jelgie[at]gmail.com wrote:

- quote -

Note that the answer to your question may be different for
state than for federal income tax purposes. There is a
federal income tax treaty with Canada that allows you to
defer taxation of the earnings on the RRSP until withdrawal.
States are not bound by such treaties. Some states may
follow the federal treatment while others do not.

California, for example, treats the RRSP just like any other
savings account held in a foreign country. As a California
resident you would be taxable on the earnings as they
accumulate. Withdrawals would not be subject to California
income tax.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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<jelgie[at]gmail.com> wrote:

- quote -

The US recognizes the RRSP as a foreign retirement trust.
As such, there will be no taxes to pay or report on the
transactions within the account -- much like a US IRA.
However, you cannot easily move an RRSP into an IRA without
incurring early withdrawl penalties, taxes, and such.

Best thing to do is probably to leave the RRSP intact. You
should be able to change the investments within the account.
If there are rules regarding changes to the investment mix,
they are entirely with the RRSP custodian, and not limited
by law. There might even be US dollar denominated options
available. It just has to be held in Canada.

When you take out the money at retirement, you will have a
Canadian return to report the distribution. It will also be
reported on your US return, with the usual options for
preventing double taxation.

Remember, you will need to report the RRSP balances on an
attachment to your US return every year.

- quote -

Consider it diversification?

Good luck!
Bryan

--
Bryan Kellar, EA
Oregon Tax Help, Inc. Portland, Oregon
www.oregontaxhelp.com
www.canadatax.org

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I started my career in Canada and then after 4 years moved
to the United States. I've now spent 5 years here, am
married to an American and will not likely be moving back to
Canada -- except, possibly, for summers in a summer vacation
home.

As it turns out, approximately 20% of my overall retirement
portfolio is currently in RRSPs. I'm actually quite happy
to have Cdn $ denominated assets right now in my retirement
account, but I really don't like what's happened to my asset
mix and I understand that I'm not allowed to change it.
Moreover, I have no clue what I'll actually be able to do
when I retire with my Cdn RRSPs in the US.

Would anyone out there have wise words of advice -- a
strategy, in other words -- regarding RRSPs for American
residents?

Thank you,
jelgie[at]gmail.com

PS I expect to get a green card and US citizenship
eventually, if that is of help to anyone.

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