Electing to Defer RRSP Gains on a US Return: When You Still Need to (and Don't) Since 2014

Quick Answer

Since December 2014, you no longer need to file Form 8891 or make an annual election to defer US tax on your Canadian RRSP. Revenue Procedure 2014-55 made the deferral automatic under Article XVIII(7) of the Canada-US tax treaty for any US person who is or was a beneficiary of a Canadian retirement plan and has filed required US tax returns. The old Form 8891 is gone — but reporting is not. You still must file FBAR (FinCEN 114) if aggregate foreign accounts exceed US$10,000, and Form 8938 if specified foreign assets exceed US$50,000 at year-end (single filer). On a $150,000 CAD RRSP that earned $9,000 inside the account last year: zero of that growth is reported as taxable US income (the deferral covers it), but the full $150,000 balance is reported on FBAR and Form 8938. The deferral covers taxation. It does not cover disclosure.

Related cross-border guides

Key Takeaways

1Revenue Procedure 2014-55 (December 2014) eliminated Form 8891 and made the RRSP deferral election automatic. If you are a US person who is or was a beneficiary of a Canadian RRSP and have filed required US tax returns, you are deemed to have elected deferral — no additional form needed.
2The automatic deferral means undistributed RRSP income (interest, dividends, capital gains inside the account) is not taxable on your US return. This mirrors Canadian treatment: no tax until withdrawal.
3FBAR (FinCEN 114) and Form 8938 (FATCA) reporting survive the deferral. A $150,000 CAD RRSP triggers both thresholds. Penalties for non-filing start at US$10,000 per violation for FBAR and US$10,000 per failure for Form 8938.
4When you withdraw, Canada withholds 25% under Part XIII of the ITA (treaty-reduced to 15% with NR301 filed). The US taxes the gross distribution as ordinary income. Form 1116 foreign tax credit offsets the Canadian withholding.
5Some US states — notably California — do not conform to the federal treaty deferral. California taxes RRSP growth annually regardless of the federal automatic election. Check your state before assuming full deferral.

Before December 2014, every US person with a Canadian RRSP had to file Form 8891 annually to elect deferral of US tax on the account's undistributed income. Miss the form — or not know it existed — and the IRS could retroactively tax every dollar of interest, dividends, and capital gains that accrued inside the RRSP, even though you never withdrew a cent.

Revenue Procedure 2014-55 changed that. The IRS killed Form 8891, made the deferral automatic under Article XVIII(7) of the Canada-US tax treaty, and retroactively cured missed elections for past years. The simplification was genuine — but it also created a dangerous misconception: that nothing needs to be filed at all.

Below: exactly who is covered by the automatic deferral, who falls outside the relief, what the residual filing obligations are, and a worked example showing how a $150,000 RRSP flows through FBAR, Form 8938, and the US return in a year with no withdrawals — and in a year with one.

Cross-border tax disclaimer

Cross-border Canada-US tax planning involves the interaction of two countries' tax codes, a bilateral treaty, and multiple filing obligations. The rules cited below are verified against IRS, CRA, and treaty sources as of June 2026. Your specific outcome depends on residency status, total worldwide income, state-level taxes, and filing history. This article explains the mechanics — a cross-border tax specialist (CPA with both US and Canadian credentials) should model your personal numbers before you make withdrawal or compliance decisions.

What Rev. Proc. 2014-55 Actually Changed

Under Article XVIII(7) of the Canada-US tax treaty, a US person can elect to defer US tax on income accruing inside a Canadian RRSP or RRIF — matching how Canada treats the account domestically. Before 2014, that election required filing Form 8891 (U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans) with every US tax return, every year.

The problem was widespread non-compliance. Most dual citizens and cross-border workers had never heard of Form 8891. The IRS was drowning in late-election requests and penalty-relief petitions.

Revenue Procedure 2014-55 (issued December 31, 2014) did three things:

Eliminated Form 8891. The form was obsoleted. No replacement was created.
Made the deferral election automatic. Any “eligible individual” — defined as a US person who is or was a beneficiary of a Canadian RRSP/RRIF and has filed required US tax returns — is deemed to have elected deferral for all open and future tax years.
Granted retroactive relief. Taxpayers who failed to file Form 8891 in prior years were treated as having made a timely election, provided they were otherwise eligible. This cured years of missed filings without the need for a private letter ruling.

The practical result

If you have a Canadian RRSP, are a US tax filer, and have filed your required US returns — the deferral is in place. No form to file for the deferral itself. The RRSP grows tax-deferred on both sides of the border simultaneously, just like a traditional IRA would in the US.

Who Gets the Automatic Deferral — and Who Doesn't

The automatic deferral under Rev. Proc. 2014-55 is broad, but it has edges. Here's the breakdown:

Situation	Automatic deferral?	Action needed
US citizen or green card holder with RRSP, all US returns filed	Yes	None for deferral. File FBAR + Form 8938 if thresholds met.
Canadian who moved to US and has filed US returns since arrival	Yes	None for deferral. FBAR + Form 8938 as applicable.
Dual citizen who has never filed US returns	No	Come into compliance first (Streamlined Filing Compliance Procedures or VDP). Deferral applies once returns are filed.
Taxpayer with delinquent or fraudulent returns	No	Resolve delinquency before automatic relief applies.
US person who previously filed Form 8891 correctly	Yes	Stop filing Form 8891 (it no longer exists). Continue FBAR + 8938.
US person who missed Form 8891 in prior years	Yes (retroactive)	Rev. Proc. 2014-55 retroactively cures the missed election. No late-filing penalty for the 8891 itself.

The critical takeaway: “filed required US tax returns” is the gating condition. If you haven't been filing, the automatic deferral doesn't apply until you come into compliance. The IRS Streamlined Filing Compliance Procedures (for non-willful non-filers) are the standard path — they require three years of back returns and six years of back FBARs with no penalties in most cases.

What You Still Have to File: FBAR, Form 8938, and State Returns

The 2014 simplification eliminated one form (8891) and one obligation (the annual deferral election). Everything else survived:

FBAR (FinCEN 114)

If the aggregate value of all your foreign financial accounts — including RRSPs, RRIFs, TFSAs, Canadian bank accounts, and brokerage accounts — exceeds US$10,000 at any point during the calendar year, you must file FBAR. This is filed electronically through FinCEN's BSA E-Filing system, not with the IRS. Due date: April 15, with an automatic extension to October 15.

Penalties for non-filing: up to US$10,000 per violation for non-willful failures; up to US$100,000 or 50% of the account balance (whichever is greater) for willful violations. The RRSP balance counts toward the aggregate threshold even though the income inside it is deferred.

Form 8938 (Statement of Specified Foreign Financial Assets — FATCA)

Separately from FBAR, Form 8938 is required if total specified foreign financial assets exceed US$50,000 at year-end or US$75,000 at any point (single filer living in the US), or US$100,000 at year-end (joint filer). Filed with your Form 1040. Penalties: US$10,000 per failure, with additional penalties up to US$50,000 for continued non-filing after IRS notification.

FBAR and Form 8938 are not the same thing

FBAR goes to FinCEN (Treasury), Form 8938 goes to the IRS. Different thresholds, different filing systems, different penalties. Having a $150,000 CAD RRSP means you likely trigger both. Many taxpayers file one and miss the other.

State-level non-conformity — the California problem

The automatic deferral under Rev. Proc. 2014-55 applies to federal US tax only. Some US states do not conform to federal treaty-based deferrals. California is the most significant example: the Franchise Tax Board treats the RRSP as a foreign investment account and taxes annual income accruing inside it on the California return, regardless of the federal automatic election.

This means a GTA professional who moves to California with a $150,000 RRSP earning 6% ($9,000/year) faces no federal tax on that $9,000 growth (deferral applies) but owes California state income tax on the $9,000 at their marginal rate (up to 13.3% at the top California bracket). Other states with known non-conformity issues include New Jersey and Connecticut — verify with your state before assuming full deferral.

The $150,000 RRSP: What Is and Isn't Reportable in a No-Withdrawal Year

A former Mississauga resident, now living in Texas (no state income tax), holds a $150,000 CAD RRSP at a Canadian institution. The RRSP earned $9,000 of investment income (interest, dividends, capital gains inside the account) during 2026. No withdrawals were made. She has filed all required US returns. Here's what gets reported — and what doesn't:

Item	Reported?	Where	Taxable on US return?
RRSP account balance ($150,000 CAD)	Yes	FBAR (FinCEN 114) + Form 8938	No
$9,000 of investment income inside RRSP	No	Not reported (deferral applies)	No
Form 8891 election	No	Form eliminated; election is automatic	N/A
RRSP on Schedule B Part III	Yes	Check “Yes” for foreign accounts question on Schedule B	No (reporting only)

The key distinction: disclosure ≠ taxation. The RRSP balance appears on FBAR and Form 8938. The income inside it does not appear on the 1040. These are two separate obligations with two separate purposes — FBAR and 8938 are about disclosure to prevent offshore tax evasion; the deferral is about matching treaty-granted tax treatment.

Same RRSP, Withdrawal Year: The Tax Math When $40,000 Comes Out

Now assume the same person withdraws $40,000 CAD from the RRSP (converted to a RRIF, periodic payments). She's filed NR301 with the Canadian institution to claim the treaty-reduced withholding rate. She's in the 22% US federal bracket.

Step	What happens	Amount (CAD)
1. Gross RRIF distribution	Full withdrawal amount	$40,000
2. Canadian non-resident withholding	15% under Article XVIII(2), NR301 filed	−$6,000
3. Cash received	Net of Canadian withholding	$34,000
4. US federal tax on full $40,000	Reported as ordinary income on 1040 (converted to USD). At 22% bracket:	~$8,800 USD-equiv.
5. Foreign tax credit (Form 1116)	$6,000 CAD withholding converted to USD, credited against US tax	−~$6,000 USD-equiv.
6. Net US tax owing	US tax minus foreign tax credit	~$2,800 USD-equiv.
Total combined tax	$6,000 CAD withholding + ~$2,800 USD net US tax	~$8,800 USD-equiv. effective

Simplified illustration. Actual amounts depend on CAD/USD exchange rate at withdrawal date, total worldwide income, and FTC limitation. The undistributed $110,000 remaining in the RRSP continues to grow tax-deferred under the automatic election.

The mechanism is the same as before Rev. Proc. 2014-55 — the treaty caps Canadian withholding at 15%, the US taxes the gross and allows the FTC. What changed is that the deferral on the remaining $110,000 requires no form filing. It just continues.

Ontario vs. Quebec: the provincial withholding layer

If the RRSP is at a Quebec-based institution, Quebec adds a separate provincial non-resident withholding tax — currently around 9% on top of the federal 25% (or treaty-reduced 15%). This provincial layer is in addition to, not in place of, the federal withholding.

Ontario does not impose a separate provincial non-resident withholding on RRSP/RRIF distributions — only the federal Part XIII withholding applies. On the same $40,000 withdrawal, a Quebec-held RRSP would face ~$6,000 federal withholding plus ~$3,600 Quebec withholding = $9,600 total Canadian withholding, compared to $6,000 from an Ontario-held RRSP. The higher combined withholding generates a larger Form 1116 credit, but may exceed the FTC limitation, creating an excess credit carryforward. Where possible, keeping the RRSP at an Ontario (or non-Quebec) institution simplifies the cross-border math.

What the Automatic Deferral Does Not Cover

The 2014 simplification was real, but the boundaries matter. Three things the automatic RRSP deferral specifically does not do:

1. It does not extend to TFSAs

The Canada-US tax treaty is silent on TFSAs (created in 2009, after the treaty was last substantively amended). The IRS treats a TFSA as a foreign grantor trust, taxing all annual income inside it and requiring Forms 3520 and 3520-A. Penalties for missed filings start at US$10,000 per form per year. Many cross-border specialists recommend collapsing the TFSA before or shortly after becoming a US tax resident. See our full Article XVIII guide for the RRSP vs. TFSA comparison table.

2. It does not make new RRSP contributions deductible on the US return

If you're now a US resident, the US does not allow a deduction for contributions to a Canadian RRSP. The deferral covers growth inside the account. If you're earning Canadian income and contributing, you get the Canadian deduction — but not a US one. Contributing while in the US generally only makes sense if you have Canadian-source earned income generating RRSP room.

3. It does not override state-level taxation

As noted above, California and several other states do not conform to the federal treaty-based deferral. The automatic election under Rev. Proc. 2014-55 applies to your Form 1040 — not your state return. If your state taxes RRSP growth annually, the deferral provides no state-level relief.

Four Planning Moves That Follow From the Post-2014 Rules

Confirm your US filing history is clean. The automatic deferral hinges on having filed required US returns. If you have gaps, the Streamlined Filing Compliance Procedures (for non-willful non-filers) cure the issue with three years of back returns and six years of back FBARs — typically with no penalties. This is the single most important compliance step.
File FBAR and Form 8938 every year, even in no-withdrawal years. The deferral covers taxation; disclosure survives. A $150,000 RRSP triggers both. The filing cost is minimal (most cross-border accountants bundle these with the return) and the penalty for missing them is not.
Convert to a RRIF and file NR301 before withdrawing. Periodic RRIF payments qualify for the 15% treaty-reduced withholding under Article XVIII(2). Without NR301, the Canadian institution defaults to 25%. On a $40,000 withdrawal, that's $10,000 withheld instead of $6,000 — the excess becomes an FTC carryforward rather than cash in your pocket.
Check your state's conformity before relocating. Moving from Ontario to California with a $150,000 RRSP means your $9,000 of annual growth is suddenly state-taxable. Moving to Texas, Florida, or Washington (no state income tax) avoids this entirely. The state question is often more consequential than the federal one, since the federal deferral is now automatic.

Timeline: How RRSP Deferral on US Returns Evolved

Period	What was required	Source
Pre-2014	File Form 8891 annually with US return to elect deferral under Article XVIII(7). Miss it and the IRS could tax all RRSP growth retroactively.	IRS Form 8891 instructions
December 2014	Rev. Proc. 2014-55 issued. Form 8891 eliminated. Deferral made automatic for eligible individuals. Retroactive relief granted for missed elections.	IRS Rev. Proc. 2014-55
2015 onward	No deferral election form needed. FBAR + Form 8938 reporting continues. Treaty-based withholding (15% via NR301) and FTC mechanism unchanged.	IRS + FinCEN

The evolution is straightforward: the IRS removed a form that most people weren't filing correctly and automated the election it was meant to capture. The underlying treaty provision (Article XVIII(7)) didn't change — the compliance mechanism did.

If you're a Canadian who moved to the US or a dual citizen sitting on a Canadian RRSP, the 2014 change was unambiguously good news for the deferral side. The part most people miss: the disclosure side (FBAR, 8938, Schedule B) is completely unchanged, and the penalties for ignoring it dwarf whatever the old Form 8891 non-filing exposure used to be. The deferral is free. The reporting is not optional.

Frequently Asked Questions

Q:Do I still need to file Form 8891 for my Canadian RRSP?

A:No. The IRS eliminated Form 8891 effective December 2014 under Revenue Procedure 2014-55. The RRSP deferral election is now automatic for any US person who is or was a beneficiary of a Canadian retirement plan and has filed required US tax returns. No replacement form was created. However, FBAR (FinCEN 114) and Form 8938 reporting obligations still apply if your RRSP exceeds the applicable thresholds.

Q:What does Revenue Procedure 2014-55 actually do?

A:Rev. Proc. 2014-55, issued by the IRS in December 2014, did three things. First, it eliminated the requirement to file Form 8891 annually to elect deferral of US tax on undistributed RRSP/RRIF income under Article XVIII(7) of the Canada-US tax treaty. Second, it deemed the election to have been made by any eligible individual — defined as a US person who is or was a beneficiary of an RRSP/RRIF and has filed required US tax returns. Third, it provided relief for taxpayers who had previously failed to file Form 8891, treating them as having made a timely election retroactively. The practical result: if you have a Canadian RRSP and are filing US returns, the deferral is automatic with no annual action required.

Q:Who is NOT covered by the automatic RRSP deferral?

A:The automatic deferral under Rev. Proc. 2014-55 requires that the US person has filed required US tax returns. If you have unfiled US returns — including returns from years when you became a US tax resident and did not file — you fall outside the automatic relief. Additionally, taxpayers with delinquent or fraudulent returns may not qualify. In those cases, you may need to come into compliance through the IRS Streamlined Filing Compliance Procedures or the Voluntary Disclosure Program before the automatic deferral applies retroactively.

Q:Do I need to report my RRSP on FBAR and Form 8938 even though the income is deferred?

A:Yes. The deferral under Article XVIII(7) covers taxation — it does not eliminate disclosure obligations. FBAR (FinCEN 114) is required if the aggregate value of all foreign financial accounts exceeds US$10,000 at any point during the year. Form 8938 (FATCA) is required if specified foreign financial assets exceed US$50,000 at year-end or US$75,000 at any point (single filer), or US$100,000 at year-end (joint filer). A $150,000 CAD RRSP triggers both. FBAR is due April 15 with an automatic extension to October 15. Form 8938 is filed with your 1040.

Q:Does California tax RRSP growth even though the IRS defers it?

A:Yes. California does not conform to the federal treaty-based deferral for Canadian RRSPs. California treats the RRSP as a foreign investment account and taxes annual income earned inside it — interest, dividends, capital gains — on the state return each year, regardless of the federal automatic election. This means a US person living in California with a Canadian RRSP faces no federal tax on undistributed growth but does face California state income tax on that growth annually. Other states that do not fully conform to federal treaty provisions may have similar results. Check your state's treatment before assuming full deferral.

Q:What happens when I actually withdraw from my RRSP as a US resident?

A:At withdrawal, two countries tax the same distribution. Canada imposes a 25% non-resident withholding tax under Part XIII of the Income Tax Act, treaty-reduced to 15% if NR301 is filed with the financial institution. The US taxes the full gross distribution as ordinary income on your Form 1040 — the entire amount, not just the net after Canadian withholding. You then claim a foreign tax credit on Form 1116 for the Canadian withholding paid, offsetting your US tax dollar-for-dollar up to the US tax on that income. The result: you pay the higher of the two countries' rates, not both stacked.

Question: Do I still need to file Form 8891 for my Canadian RRSP?

Answer: No. The IRS eliminated Form 8891 effective December 2014 under Revenue Procedure 2014-55. The RRSP deferral election is now automatic for any US person who is or was a beneficiary of a Canadian retirement plan and has filed required US tax returns. No replacement form was created. However, FBAR (FinCEN 114) and Form 8938 reporting obligations still apply if your RRSP exceeds the applicable thresholds.

Question: What does Revenue Procedure 2014-55 actually do?

Answer: Rev. Proc. 2014-55, issued by the IRS in December 2014, did three things. First, it eliminated the requirement to file Form 8891 annually to elect deferral of US tax on undistributed RRSP/RRIF income under Article XVIII(7) of the Canada-US tax treaty. Second, it deemed the election to have been made by any eligible individual — defined as a US person who is or was a beneficiary of an RRSP/RRIF and has filed required US tax returns. Third, it provided relief for taxpayers who had previously failed to file Form 8891, treating them as having made a timely election retroactively. The practical result: if you have a Canadian RRSP and are filing US returns, the deferral is automatic with no annual action required.

Question: Who is NOT covered by the automatic RRSP deferral?

Answer: The automatic deferral under Rev. Proc. 2014-55 requires that the US person has filed required US tax returns. If you have unfiled US returns — including returns from years when you became a US tax resident and did not file — you fall outside the automatic relief. Additionally, taxpayers with delinquent or fraudulent returns may not qualify. In those cases, you may need to come into compliance through the IRS Streamlined Filing Compliance Procedures or the Voluntary Disclosure Program before the automatic deferral applies retroactively.

Question: Do I need to report my RRSP on FBAR and Form 8938 even though the income is deferred?

Answer: Yes. The deferral under Article XVIII(7) covers taxation — it does not eliminate disclosure obligations. FBAR (FinCEN 114) is required if the aggregate value of all foreign financial accounts exceeds US$10,000 at any point during the year. Form 8938 (FATCA) is required if specified foreign financial assets exceed US$50,000 at year-end or US$75,000 at any point (single filer), or US$100,000 at year-end (joint filer). A $150,000 CAD RRSP triggers both. FBAR is due April 15 with an automatic extension to October 15. Form 8938 is filed with your 1040.

Question: Does California tax RRSP growth even though the IRS defers it?

Answer: Yes. California does not conform to the federal treaty-based deferral for Canadian RRSPs. California treats the RRSP as a foreign investment account and taxes annual income earned inside it — interest, dividends, capital gains — on the state return each year, regardless of the federal automatic election. This means a US person living in California with a Canadian RRSP faces no federal tax on undistributed growth but does face California state income tax on that growth annually. Other states that do not fully conform to federal treaty provisions may have similar results. Check your state's treatment before assuming full deferral.

Question: What happens when I actually withdraw from my RRSP as a US resident?

Answer: At withdrawal, two countries tax the same distribution. Canada imposes a 25% non-resident withholding tax under Part XIII of the Income Tax Act, treaty-reduced to 15% if NR301 is filed with the financial institution. The US taxes the full gross distribution as ordinary income on your Form 1040 — the entire amount, not just the net after Canadian withholding. You then claim a foreign tax credit on Form 1116 for the Canadian withholding paid, offsetting your US tax dollar-for-dollar up to the US tax on that income. The result: you pay the higher of the two countries' rates, not both stacked.