Topic · Canada
RRSPs and US tax: the deferral is automatic, the reporting is not
The RRSP is the one Canadian wrapper the United States genuinely respects. Since 2014 the deferral is automatic and Form 8891 is gone — which is exactly why people now under-report it.
By Danilson Ramos · Founder, Atamatax
Updated August 2026
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Ask a US citizen in Canada which registered account causes them problems and they will usually name the RRSP. It is the wrong answer. The RRSP is the account that works — and the misplaced worry matters, because it sends people looking for a problem here while the TFSA and the RESP sit unexamined.
What Article XVIII actually does
The 1980 Convention treats a Canadian registered retirement plan as a pension for US purposes. Income and gains accruing inside it are not currently taxed by the United States; tax arrives when money comes out. That is genuine treaty relief, and it survives the saving clause because Article XXIX(3) lists the pension article among its exceptions.
Before 2014 you had to claim it — an annual election, filed on Form 8891, and a widespread source of missed filings. Rev. Proc. 2014-55 removed the requirement. Eligible taxpayers now get the deferral automatically, Form 8891 was withdrawn, and taxpayers who had never made the election were granted relief.
The wrapper decides the PFIC answer
This is the single most useful thing to understand about a Canadian portfolio. Take one Canadian equity mutual fund and put it in three places:
| Wrapper | US treatment of income | Annual Form 8621? |
|---|---|---|
| RRSP / RRIF | Deferred under Article XVIII until distribution | No, while the deferral holds |
| TFSA | Currently taxable — no US recognition of the wrapper | Generally yes, per fund per year |
| RESP | Currently taxable to the subscriber | Generally yes, per fund per year |
| Non-registered account | Currently taxable | Generally yes, per fund per year |
Same fund, same manager, same ISIN — four different US outcomes, decided entirely by the wrapper. A Canadian portfolio built without that in view tends to put the growth assets in exactly the wrong place.
What you still have to report
- FBAR. An RRSP is a foreign financial account. Its maximum value counts toward the $10,000 aggregate, measured across every non-US account you hold anywhere.
- Form 8938. The RRSP is a specified foreign financial asset and counts toward the thresholds ($200,000 at year end, or $300,000 at any point, for a single filer abroad).
- Form 8833. Generally not needed for the ordinary RRSP deferral, which Rev. Proc. 2014-55 makes automatic rather than a claimed treaty position.
When money comes out
A withdrawal is US-taxable in the year received. If you are a Canadian resident, Canadian tax applies at your marginal rate; if you have moved to the United States, Canada generally withholds 25% (15% on periodic RRIF payments under the treaty). Either way that Canadian tax is generally creditable on Form 1116, so the ordinary outcome is one layer of tax rather than two.
Check what your Canadian accounts trigger
The free checker takes your account balances and shows which reporting thresholds you cross — FBAR, Form 8938, or neither.
Authorities cited
- US–Canada Income Tax Treaty — Convention between the United States and Canada (signed 1980), as amended by its five Protocols
- Rev. Proc. 2014-55 — Rev. Proc. 2014-55 — automatic tax deferral for Canadian RRSPs and RRIFs; eliminates the Form 8891 election
- IRS Form 8938 — About Form 8938 — Statement of Specified Foreign Financial Assets
- FinCEN Form 114 (FBAR) — Report of Foreign Bank and Financial Accounts (FBAR)
- IRS Form 1116 — About Form 1116 — Foreign Tax Credit (Individual, Estate, or Trust)
Primary sources (Cornell Legal Information Institute for the US Code and CFR; IRS.gov for forms, procedures, and treaty documents). This page is general information, not individualized tax or legal advice.
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