# US Inheritance IRA for Canadian Taxpayer



## stephen67 (Aug 4, 2016)

Hello, I also posted to Retirement since this is cross-topic.

For US IRA's the beneficiaries have the option, upon the death of the owner, to maintain the IRA as an "Inheritance IRA" with mandatory distributions based on the age of the beneficiary. This maintains the tax shelter.

This feature does not exist with Canadian RRIF's, of course.

My question is, Does the CRA recognize the continuation of the tax shelter by virtue of Tax Treaties?

Both the beneficiary and owner are Canadian citizens and residents.

Thank you in advance
Stephen


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## mikep00 (Aug 17, 2016)

An inheritance of a US IRA would be subject to Canadian taxation under clause 56(1)(a)(i)(C.1) of the _Income Tax Act_.

The US (IRS) will also take a 30% withholding tax (can be lowered using the Canada-US Tax Treaty provisions to 15%).

There is no rollover provision available in the US to non-resident beneficiaries for obvious reasons (non-resident aliens are normally not required to file a US tax return).

The closest thing to a continuation of the tax shelter would be to receive the funds and contribute them to an RRSP/TFSA (assuming you have room).





stephen67 said:


> Hello, I also posted to Retirement since this is cross-topic.
> 
> For US IRA's the beneficiaries have the option, upon the death of the owner, to maintain the IRA as an "Inheritance IRA" with mandatory distributions based on the age of the beneficiary. This maintains the tax shelter.
> 
> ...


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