U.S. reporting requirements for Canadian RRSPs/RRIFs

As requested by the AICPA Tax Division's Form 3520 Task Force in August 2003, Notice 2003-75(2) sets forth a simplified reporting regime for taxpayers with interests in Canadian registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs), effective for tax years beginning after 2002. A Canadian RRSP is similar to a Sec. 401(k) plan. Canadian employers often contribute on a tax-deferred basis to an account in an employee's name. The difference is that current-year earnings of an RRSP or RRIF need to be reported on Form 1040, unless an affirmative election is made to defer tax until funds are distributed. For current-year undistributed earnings (i.e., interest, dividends or capital gains), one can either (1) report income currently on Form 1040, Schedule B or D or (2) elect to defer reporting income until funds are distributed to the account holder. The election is made by attaching a statement to the return containing information prescribed in Rev. Proc. 2002-23, Section 4 and Notice 2003-75, Section 2.02.