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 a contribution to a 401(k) plan could be considered as a foreign holding in a self-directed RRSP plan.
A contribution to a 401(k) plan cannot be an investment (or a foreign holding) in a self-directed RRSP plan for the following reasons.
Position:
No
Reasons:
A contribution to a 401(k) plan does not fall under the definition of a "qualified investment" in subsection 146(1) of the Act and neither does an interest in a 401(k) trust.
December 13, 1995
VECR Income Tax Rulings and
Verification Division Interpretations
Directorate
Attention: Kathy Beamish G. Middleton
957-2122
953231
401(k) Pension Plan Contributions
This is in reply to your fax dated December 7, 1995 concerning Question 12 as to whether a contribution to a 401(k) plan could be considered as a foreign holding in a self-directed RRSP plan.
A contribution to a 401(k) plan cannot be an investment (or a foreign holding) in a self-directed RRSP plan for the following reasons.
- A "qualified investment" for a trust governed by an RRSP is defined in subsection 146(1) of the Act and includes prescribed investments set out in subsection 4900(1) of the Regulations. It also includes certain investments falling under the definition of a "qualified investment" in section 204 of the Act. A contribution to a 401(k) plan does not fall under the definition of a "qualified investment" in subsection 146(1) of the Act and neither does an interest in a 401(k) trust.
- As indicated in the legislation for the definition of a "qualified investment" in subsection 146(1) of the Act and in paragraph 1 of Interpretation Bulletin IT-320R2, there is a requirement that all investments of a trust governed by an RRSP, including a self-directed RRSP, must be registered in the name of the trustee, not in the name of the annuitant of the RRSP or any other person. It is our understanding that an employee's contribution to, or interest in, a 401(k) plan could not be registered in the name of the RRSP trustee and, as a result of this, such a requirement could not be satisfied.
for Director
Reorganizations and Foreign Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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