Form 8891 Is Gone: How RRSP Treaty Deferral Works Now, and the One Case Where a Late Election Still Needs Paper

Form 8891 haunts search results and old advice a decade after its abolition, so the first job is to state the current rule plainly: no annual form is required to defer US tax on an RRSP or RRIF's undistributed income. The treaty's pension article allows a US person to elect to defer US taxation on income accrued in a Canadian registered retirement plan until distribution; before 2014 the election was made annually on Form 8891 attached to the return, and taxpayers who failed to file it were technically taxable on the plan's income each year — a trap that caught thousands of compliant-in-spirit filers. Revenue Procedure 2014-55 ended it: eligible individuals are treated as having made the election in the first year they would have been entitled to it, automatically and retroactively, and Form 8891 was retired; the deferral now simply applies. Who is eligible for the automatic treatment: a US citizen or resident who is or was a beneficiary of an RRSP or RRIF, who has filed (or files) US returns for every year they were a citizen or resident in which they held the plan, and who has not reported the plan's undistributed income as gross income on any of those returns — the last condition being the one that matters, because the procedure is designed to grant the deferral to people who acted as if they had it. Who is not automatically covered: an individual who at some point reported the RRSP's undistributed income on a US return — having included the earnings as if the plan were a taxable account — is not an eligible individual for the automatic election and must request the IRS's consent to make a late election through the letter-ruling process under the applicable regulations, the one case where paper is still required; and a person who did not file US returns for years in which they held the plan becomes eligible by filing them (the streamlined submission or delinquent returns for the never-filer) — the catch-up itself satisfies the filing condition. What the RRSP still requires on the US return, deferral notwithstanding: reporting on the FBAR every year (it is a foreign financial account, and the automatic deferral says nothing about FBARs); reporting on Form 8938 where thresholds are met (the RRSP counts toward the threshold and is listed as an asset, with the deferred income noted); no Form 8621 for funds held inside the RRSP (the PFIC rules' application to RRSP holdings has been resolved in the taxpayer's favor by regulation for plans covered by the treaty election); and, when distributions begin, inclusion of distributions as pension income with a foreign tax credit for the Canadian withholding — and with basis recovery: contributions that were never deductible for US purposes (Canadian deductions don't reduce US basis) form a US basis in the plan recovered pro rata against distributions, a computation that requires the contribution history the retiree guides describe. The related account questions the abolished form's absence sometimes obscures: the deferral covers RRSPs and RRIFs (and, by the IRS's treatment, the locked-in variants — LIRAs and LIFs — as registered retirement plans); it does not cover the TFSA (no treaty provision, taxable annually), the RESP (taxable annually), or the FHSA (unresolved and generally treated as taxable) — the accounts the registered-accounts guide sorts. State returns are a footnote with teeth: California does not follow the treaty and taxes RRSP income annually for its residents, the abolished federal form never having had a California equivalent; other states generally follow federal treatment. The practical summary for the American with an RRSP: file US returns every year (the deferral's condition), report the plan on the FBAR and 8938, keep the contribution history for the eventual basis computation, do not report the plan's earnings as income, and — if you once did report them — get the late-election consent rather than assuming the automatic rule covers you.

Key takeaways

• No annual form: Form 8891 was eliminated in 2014; the treaty deferral on RRSP and RRIF growth applies automatically to eligible individuals — no election, no attachment, no annual statement.
• Eligibility has one real condition: you filed US returns for the years you held the plan (or file them now) and never reported the plan's undistributed income as taxable — act as if you had the deferral and you have it.
• The paper case: anyone who once reported RRSP earnings as income is not eligible for the automatic election and requests the IRS's consent for a late election through the ruling process.
• The RRSP still reports everywhere else: FBAR every year; Form 8938 where thresholds are met; no 8621 for funds inside a treaty-covered plan; distributions as pension income with credits and basis recovery.
• Deferral covers registered retirement plans only: RRSP, RRIF, LIRA, LIF — not the TFSA, RESP, or FHSA, which the IRS taxes annually.
• California doesn't follow: its residents owe California tax on RRSP growth annually regardless of the federal deferral — a state-layer item for anyone with California years.

The RRSP holder's annual checklist

Return filed (the condition). RRSP on the FBAR at maximum value. RRSP on Form 8938 where the threshold is met, with the deferral noted. No RRSP earnings on Schedule B or D. No Form 8621 for funds inside the plan. Contribution history updated (the eventual basis). If distributions: pension income reported, Canadian withholding credited, basis recovered pro rata. If California resident: the state add-back computed. Six lines a year — the form's abolition made it a checklist, not a filing.

Worked example

Three RRSP holders, one rule. Holder one: a US citizen in Edmonton who has filed 1040s for twenty years, reporting the RRSP on every FBAR and 8938 and never including its earnings — an eligible individual, automatically deferred since before the rule existed; her only action is confirming her contribution history is complete for the basis computation retirement will need. Holder two: a returned emigrant in Seattle whose US preparer, unfamiliar with the treaty, reported the RRSP's annual earnings as investment income on three returns before a cross-border review caught it — not an eligible individual for the automatic election (the undistributed income was reported); the fix is a request for the IRS's consent to a late election through the ruling process, with amended returns removing the previously reported income following the consent — the one paper route that still exists, and one that a decade of "8891 is gone" advice misleads people into skipping. Holder three: a never-filed dual citizen in Halifax with an RRSP from her first job — she becomes an eligible individual by filing: her streamlined submission's three returns treat the RRSP as deferred, report it on the FBARs and 8938s, include no earnings, and the automatic election attaches retroactively to every year she held the plan as a US citizen. Three holders, no forms — and one of them needed a ruling because a preparer once did what the form's absence now makes it easy to forget was ever wrong.

Official sources

Under Rev. Proc. 2014-55, "an eligible individual who did not previously make an election under Article XVIII(7) ... will be treated as having made the election in the first year in which the individual would have been entitled to elect the benefits ... Consequently, such eligible individual will not be required to make the election for that first year or for any subsequent years either on Form 8891 or under the procedures set forth in Revenue Procedure 2002-23." — Internal Revenue Service, Revenue Procedure 2014-55, https://www.irs.gov/pub/irs-drop/rp-14-55.pdf

"Taxpayers using either the Streamlined Foreign Offshore Procedures ... or the Streamlined Domestic Offshore Procedures ... will be required to certify ... that the failure to report all income, pay all tax and submit all required information returns, including FBARs (FinCEN Form 114 ...) was due to non-willful conduct." Non-willful conduct is "conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law." — Internal Revenue Service, Streamlined filing compliance procedures, https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures

Practitioner note

Form 8891's ghost still produces two errors: the annual attachment nobody needs, and the assumption that 'automatic' covers everyone — when the one person it doesn't cover is the taxpayer whose preparer once reported RRSP earnings as income. Our RRSP checklist is six lines a year, plus a review of any prior US returns for reported plan earnings, because the late-election consent process is the only paper this area still requires and the only one people skip.

See also: For Form 8938 and the FBAR side by side, see Form 8938 and the FBAR side by side; and browse every cross-border tax topic guide, organized by situation.

Next step

Fairlight prepares the RRSP compliance review — eligibility confirmation against prior returns, the FBAR and 8938 reporting, contribution-history maintenance for basis recovery, the late-election consent request where prior earnings were reported, and the California add-back where relevant. See cross-border pricing or book a call.