7 April 1994 External T.I. 9407155 - TRANSFER FROM U.S. 401(K) TO RRSP

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether there is an indirect transfer available for lump sum payments out of U.S. 401(k) plan to RRSP.

Position TAKEN:

Yes, in certain circumstances.

Reasons FOR POSITION TAKEN:

Routine

XXXXXXXXXX		940715

April 7, 1994

Dear Sir:

Re: Lump Sum from a U.S. 401(k) Plan: Eligibility for Transfer to Registered Retirement Savings Plan (RRSP)

This is in reply to your facsimile transmission of March 19, 1994, in which you ask us to confirm information you received concerning the above-noted transfer and the use of Form T2097 (Identification of Amounts Transferred to an RRSP for 19__).

This will serve to confirm that the Department recognizes a U.S. 401(k) plan as a pension plan. In accordance with paragraph 60(j) of the Income Tax Act (unless as otherwise stated all references to this statute are to the Income Tax Act S.C. 1970-71-72,c.63 as amended, consolidated to June 10, 1993 - the "Act") lump sum payments received out of unregistered pension plans which are brought into income pursuant to subparagraph 56(1)(a)(i) of the Act may be transferred, in certain circumstances, to a registered pension plan or RRSP. Enclosed are copies of the relevant pages of the 1993 RRSP's and Other Registered Plans for Retirement Guide which describe the circumstances under which a deduction may be taken for a contribution to an RRSP in respect of this type of pension income. Please refer in particular to page 39 (the second and fourth paragraphs) and page 40 (the last complete indented paragraph) and the copy of Form T2097 (line 4). The complete Guide is available from the Ottawa District Office at 360 Lisgar Street.

Although the foregoing comments are not binding on the Department, we trust they are helpful.

Yours truly,

for Director
Financial Industries Division
Rulings Directorate

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