What Was Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans?

Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans was an Internal Revenue Service (IRS) form completed by U.S. citizens or residents who participated in registered Canadian retirement savings plans or income funds. These plans included registered retirement savings plans (RRSPs) or registered retirement income funds (RRIFs). Form 8891 was used to report any contributions made and earnings accrued, but not distributed, and distributions received from these plans. It was used to elect to defer U.S. tax on these plans.

A registered retirement savings plan is a savings and investment vehicle for employees and the self-employed in Canada, similar to a 401(k). Pretax money is placed into an RRSP and grows tax-free until withdrawal, at which time it is taxed at the marginal rate. A registered retirement income fund is similar to an annuity contract that pays out income to a beneficiary or a number of beneficiaries. To fund retirement, RRSP holders often roll over their RRSPs into an RRIF.

[Important: The IRS discontinued Form 8891 as of tax year 2015.]

Who Filed Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans?

Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans was filed by any U.S. citizen or resident who contributed to and/or received benefits from an RRSP or RRIF. The form was completed for any year the taxpayer received a distribution from the plan. A separate form was required for each plan. The completed form was submitted to the IRS along with Form 1040, even if a joint return was filed.

How to File Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans

The taxpayer was required to fill out his or her personal information including name, address, and Social Security number. The form also required the name and address of the plan custodian (the financial institution or firm where the account was held), the account number, as well as the type of plan. The remainder of the form required information regarding the distributions and interest income, which was then entered on Form 1040.

Why was Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans Discontinued?

The IRS found many individuals failed to properly prepare and file Form 8891 each year and report details about each of their RRSPs or RRIFs, including contributions made, income earned, distributions received, and the year-end balance. If the forms were not properly filed with the annual U.S. income tax return, income earned in their RRSP or RRIF could have been taxable, even if it was not distributed. So, the IRS provided retroactive relief to eligible taxpayers who failed to properly file the appropriate forms in the past.

The change relates to a longstanding U.S.-Canada tax treaty provision that enables U.S. citizens and resident aliens to defer tax on income accruing in their RRSP or RRIF until it is distributed. Otherwise, U.S. tax is due each year on this income, even if it is not distributed.

As a result of the change, many U.S.-dwelling taxpayers with RRSPs or RRIFs automatically qualified for tax deferrals similar to those prominent in other retirement vehicles, such as Individual Retirement Accounts (IRAs) and 401(k) plans. Most U.S.-dwelling individuals qualified for the deferral as long as they filed U.S. income tax returns.

Download Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans

Click this link to download a copy of Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans. Remember, this form was discontinued as of tax year 2015 and can no longer be used.

Key Takeaways

  • Form 8891 was filed by U.S. citizens or residents who participated in registered Canadian retirement savings plans or income funds.
  • The form was discontinued as of tax year 2015.