Form 8891: Return for Beneficiaries of Canadian Registered Retirement Plans

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. It was used to elect to defer U.S. income tax on these plans.

The IRS discontinued Form 8891 as of the tax year 2015.

Key Takeaways

  • Form 8891 was filed by U.S. citizens or residents who participated in Canadian registered retirement savings plans or registered retirement income funds.
  • Form 8891 was necessary to defer paying U.S. income tax on these retirement vehicles' earnings.
  • The form was discontinued as of the tax year 2015.

Understanding Form 8891

Form 8891: U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans applied primarily to registered retirement savings plans (RRSPs) or registered retirement income funds (RRIFs). A registered retirement savings plan is a savings and investment vehicle for employees and the self-employed in Canada, similar to the U.S. 401(k) plan.  Pretax money is placed into an RRSP and grows tax-free until withdrawal, at which time it is taxed at the account holder's 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 their retirement years, RRSP holders often roll over their RRSPs into an RRIF.

Form 8891 was used to report any contributions made and distributions received from these plans, along with earnings accrued within the plan (even if they weren't distributed.)

Who Filed Form 8891?

Form 8891 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.

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) and 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 Discontinued?

The IRS announced the elimination of Form 8891 on Oct. 7, 2014.

The change related 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. Otherwise, U.S. tax is due each year on this income, even if it is not distributed.

But to qualify for the deferral, taxpayers had to attach Form 8891 to their return and choose this tax treaty benefit, something many eligible taxpayers failed to do. The agency also found many individuals neglected to properly prepare 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.

As a result, if the forms were not properly filled out or filed with the annual U.S. income tax return, income earned in their RRSP or RRIF could have been taxable—whether or not the individual actually withdrew the funds.

Under the old system, a primary way to correct the omission of not filing Form 8891 and retroactively obtain the treaty benefit was to request a private letter ruling from the IRS, a costly and often time-consuming process.

So, "to simplify procedures for U.S. taxpayers," the IRS discontinued Form 8891. They were no longer required to file it, for any tax year, past or present. In addition, the IRS provided retroactive relief to eligible taxpayers who failed to properly file the appropriate forms in the past.

As a result of the change, many U.S.-dwelling taxpayers with RRSPs or RRIFs automatically qualify for tax deferrals similar to those in other retirement vehicles, such as individual retirement accounts (IRAs) and 401(k) plans. Most U.S.-dwelling individuals are eligible for deferral as long as they properly file U.S. income tax returns.

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  1. Internal Revenue Service. "IRS Simplifies Procedures for Favorable Tax Treatment on Canadian Retirement Plans and Annual Reporting Requirements." Accessed June 30, 2021.

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