What Happens to Your RRSP, TFSA, and RESP in Streamlined Filing

Streamlined Foreign Offshore Procedures asks for three years of returns and six years of FBARs, and most people assume the work scales with that: a fixed, predictable catch-up. It doesn’t, not for a Canadian. The variable that actually drives the size of a streamlined file is which accounts sit behind the numbers, because an RRSP, a TFSA, and an RESP each answer to a different part of the US tax code, and none of them answers to the same forms. Get the account-by-account mapping wrong and you either overpay tax that a treaty was built to defer, or underfile a trust return that carries its own penalty regime.

This is that mapping: what’s treaty-protected, what’s a foreign trust, and where the paperwork actually multiplies.

What makes Canadian accounts a US reporting problem?

Every Canadian account type answers to a different part of the US tax code, and the forms don’t overlap the way people expect. An RRSP needs FBAR and Form 8938 but no ongoing US tax on its growth. A TFSA or RESP is a foreign trust, reported annually on Forms 3520 and 3520-A, with its income fully taxable. Any Canadian mutual fund inside any of them adds a separate Form 8621 per fund, per year.

None of these regimes were written with each other in mind, so a single Canadian account can trip more than one at once. Bank and brokerage accounts of every kind fall under 31 USC 5314, the FBAR statute, once your combined foreign account balances cross $10,000 at any point in the year, and that includes registered accounts: an RRSP or a TFSA is a foreign financial account for FBAR purposes regardless of what it’s called in Canada. 26 USC 6038D layers Form 8938 on top for specified foreign financial assets, at a higher and residency-dependent threshold: $50,000 on the last day of the year or $75,000 at any point for a single filer living in the US, doubled for a joint return.

That’s the layer every Canadian account shares. What splits them apart is the foreign trust question and the PFIC question, and those two only attach to some of them.

Account	FBAR	Form 8938	US tax on growth	Foreign trust (3520/3520-A)	PFIC exposure (8621)
RRSP / RRIF	Yes	Yes	Deferred under treaty	No, per Rev. Proc. 2014-55	Excepted while the treaty election runs
TFSA	Yes	Yes	Yes, every year	Yes, both forms	Yes, per fund held inside
RESP (US person is subscriber)	Yes	Yes	Yes, every year	Yes, both forms	Yes, per fund held inside
RESP (US person is only the beneficiary)	Depends on signing authority	Depends on ownership	Reporting sits with the subscriber	Sits with the subscriber	Sits with the subscriber
Regular Canadian bank or brokerage account	Yes	Yes	Yes, on ordinary income and gains	No	Yes, if it holds mutual funds or ETFs

A regular taxable account with a few mutual funds is already two regimes deep before you touch a registered account at all. Add an RRSP, a TFSA, and an RESP, and you’re running all five columns of that table at once, on four or five accounts, across three years of returns.

Does my RRSP need US tax reporting in streamlined?

Yes for FBAR and Form 8938, but no US tax applies to the growth. Article XVIII(7) of the treaty lets you defer US tax on income accrued inside an RRSP or RRIF until it’s distributed, and since Rev. Proc. 2014-55 that election is automatic, so Form 8891 no longer applies.

The treaty article itself is short, and it’s worth reading exactly what it grants:

Article XVIII(7): “A natural person who is a citizen or resident of a Contracting State and a beneficiary of a trust, company, organization or other arrangement that is a resident of the other Contracting State, generally exempt from income taxation in that other State and operated exclusively to provide pension or employee benefits may elect to defer taxation in the first-mentioned State, subject to rules established by the competent authority of that State, with respect to any income accrued in the plan but not distributed by the plan, until such time as and to the extent that a distribution is made from the plan or any plan substituted therefor.”

Before 2014, claiming that deferral meant filing Form 8891 every year. Rev. Proc. 2014-55 changed the mechanism, not the benefit. Section 4.02 makes the election automatic for anyone who qualifies:

Section 4.02: “An eligible individual who did not previously make an election under Article XVIII(7) of the Convention to defer current U.S. income taxation on the undistributed income of a Canadian retirement plan will be treated as having made the election in the first year in which the individual would have been entitled to elect the benefits under Article XVIII(7) with respect to the plan.”

An eligible individual, under section 4.01, is someone who’s been a US citizen or resident for every year they held the plan, has met their US filing requirements for those years, hasn’t already reported the plan’s undistributed earnings as gross income, and has reported any actual distributions consistently with the deferral being in effect. That last condition is the one that trips up a catch-up filer who guessed wrong in an earlier year and reported a distribution as fully taxable income rather than as a treaty-deferred withdrawal. Whether you actually qualify as an eligible individual is worth confirming before you rely on any of this, because the deferral runs on that four-part test, not on the fact that you own an RRSP.

The 3520 question, the one most people ask next, is answered inside the same revenue procedure rather than left open. Section 5.01 addresses section 6048 reporting directly:

Section 5.01: “Beneficiaries (regardless of whether they are ‘eligible individuals’) and annuitants are not required to report contributions to, distributions from, and ownership of a Canadian retirement plan under the simplified reporting regime established by Notice 2003-75 (Form 8891) or pursuant to the reporting obligations imposed by section 6048 (Form 3520).”

That’s a direct exemption from Forms 3520 and 3520-A for an RRSP or RRIF, not a practitioner workaround. Form 8891 itself was obsoleted as of December 31, 2014, under section 5.02 of the same procedure. What’s left for an RRSP in a streamlined file is FBAR every year, Form 8938 on the returns that require it, and no annual 8621 for funds held inside the plan while the treaty election runs, under the foreign-pension-fund exception at Reg. 1.1298-1(c)(4). No 3520, no 3520-A, and no current US tax on the growth.

Is a TFSA a foreign trust for US tax purposes?

Yes. A TFSA is treated as a foreign trust with no treaty exemption, so all its interest, dividends, and capital gains are currently taxable on your US return, and the account itself gets reported annually on Forms 3520 and 3520-A.

Nothing in the treaty reaches a TFSA the way Article XVIII(7) reaches an RRSP, because Article XVIII(7) is written for a plan “operated exclusively to provide pension or employee benefits,” and a TFSA is a general-purpose savings vehicle with no such restriction. That’s the whole reason the two accounts land in different regimes: the treaty carve-out is purpose-built for retirement plans, and a TFSA was never a retirement plan under Canadian law either. Whether the trust question actually attaches to your TFSA, and what the three forms cover, is worth reading in full rather than assumed from the account name.

Once the trust characterization applies, the reporting stacks in a specific order. Form 3520-A, the trust’s own annual information return, is due the 15th day of the third month after the trust’s tax year ends, March 15 for a calendar-year account, with a six-month extension available on Form 7004. Form 3520, the US owner’s return, is due with your 1040, so April 15 or October 15 on extension. FBAR and Form 8938 run alongside both, on their own thresholds, and any Canadian mutual fund or ETF inside the TFSA adds its own Form 8621, since the trust wrapper doesn’t change what’s held inside it.

The tax result is the part that surprises people most. A TFSA’s entire design in Canada is that its income is tax-free there, which means there’s no Canadian tax paid on that income and nothing for a foreign tax credit to offset. The US taxes it in full, at ordinary rates on interest and dividends and at capital gains rates on realized gains, with no credit available to soften it. The account that was built to be tax-free ends up being the one account in the whole structure with no relief on either side of the border.

How does an RESP get reported in streamlined filing?

If the US person is the subscriber, the one who opened and contributes to the account, the RESP is a foreign trust reported the same way as a TFSA: Forms 3520 and 3520-A, FBAR, and Form 8938. If the US person is only the beneficiary, the child, the reporting duty sits with the subscriber, not with them.

That distinction matters more with an RESP than with a TFSA, because an RESP is built around a subscriber and a beneficiary being different people from the start, usually a parent and a child. A US-citizen child with a Canadian RESP opened by a non-US parent generally has nothing to report on the account itself. A US-citizen parent who opened the RESP for a Canadian-resident child has the full foreign trust question, on top of everything else in their own streamlined file. Get the subscriber wrong and you either report an account that isn’t yours to report, or, worse, skip one that is.

The Canada Education Savings Grant adds a layer nobody expects. The CESG is a federal top-up paid into the RESP alongside the subscriber’s own contributions, and once it lands inside a foreign trust, growth on the grant dollars is treated the same as growth on the contributed dollars: it’s income inside the trust, reportable the same way. The grant itself isn’t a separate filing, but it does mean the RESP’s asset base, and its earnings, run larger than what the subscriber personally put in, which shows up in the trust’s numbers whether the grant is thought of as “free money” or not. The Canada Learning Bond runs the same way for a household that qualifies for it.

The unwind matters just as much as the ongoing reporting. If the beneficiary doesn’t pursue post-secondary education, the RESP can be collapsed and the growth paid out to the subscriber as an accumulated income payment, taxed in Canada at the subscriber’s rate plus an additional tax, unless it’s rolled into RRSP room instead. On the US side, that payout is a distribution from a foreign trust to its owner, reportable on the subscriber’s Form 3520 for the year it happens, on top of whatever ordinary income tax applies to it. A streamlined catch-up that includes a collapsed RESP inside the covered years needs that distribution captured, not just the account’s existence.

The full mechanics of the RESP question, including how it interacts with a move across the border, go further than this section does.

Why the paperwork multiplies fast

The instinct is to multiply everything by every account and every year, and that overstates the problem in one place and understates it in another. Two of the five forms in play, FBAR and Form 8938, are filed once per person per year and list every account on that single filing. They don’t multiply per account. Three of the five, Form 3520-A, the trust’s own return, and Form 8621, do multiply, and that’s where a Canadian streamlined file gets expensive.

Form	What it multiplies by	Typical count for a household with an RRSP, spousal RRSP, TFSA, and RESP
FBAR	Person, per year (all accounts on one filing)	One per year, aggregating every account
Form 8938	Return, per year (all assets on one filing)	One per return, for years the threshold is met
Form 3520	Owner, per year (can report more than one trust on the same return)	One per year for the person holding the TFSA and RESP
Form 3520-A	Trust, per year	One per foreign-trust account, per year: the TFSA and the RESP each need their own
Form 8621	Fund, per account, per year	One per Canadian mutual fund or ETF held in a taxable-for-PFIC account

This is also why a Canadian streamlined file and an American-abroad streamlined file with a single foreign bank account aren’t comparable jobs, even though both fit the same three-years-and-six-FBARs framework. What actually drives the fee on a PFIC-heavy return is almost always the fund count sitting inside the trust accounts, not the number of accounts itself.

Should I close my TFSA after streamlined filing?

There’s no requirement to close it, but most practitioners recommend it. Keeping a TFSA open means Forms 3520 and 3520-A every year going forward, plus Form 8621 for any funds inside it, to protect a Canadian tax break the US doesn’t recognize.

The standard cleanup, once a streamlined file is caught up and closed out, has four pieces:

• Close the TFSA, or accept the ongoing 3520/3520-A burden if there’s a reason to keep it open.
• Keep the RRSP. It’s treaty-deferred, and the reporting load is light: FBAR and Form 8938, nothing more, as long as the treaty election keeps running.
• Convert Canadian mutual funds and ETFs to US-listed equivalents wherever they sit, since a US-domiciled fund isn’t a foreign corporation and the PFIC test never engages.
• Open a US brokerage account for anything new, so future growth never enters the PFIC or foreign trust systems in the first place.

Do all four and the ongoing filing load drops to FBAR, Form 8938, and a plain 1040, which is a different order of magnitude from what a TFSA and a fund-heavy RESP cost every year they stay open.

If there’s a real chance of moving back to Canada, or moving again on a work visa, the cleanup calculus changes, since closing an RRSP or a TFSA has its own consequences on the Canadian side. What happens to an RRSP and a TFSA on a later move is worth reading before acting on the cleanup list above if another cross-border move is realistically on the table.

What mistakes do preparers make with these accounts?

The most common one is treating an RRSP distribution as fully taxable income the moment it’s withdrawn, without checking whether the treaty deferral was actually in effect for the years the growth accrued. Under Article XVIII(7), only the income that was never previously reported and never previously taxed carries forward as deferred; a distribution isn’t automatically all taxable and it isn’t automatically all tax-free, either, and getting that split wrong runs in both directions.

The second is missing the TFSA entirely. A lot of preparers never ask the question, because the account name doesn’t signal “trust” the way a formal trust document does, and a client with a TFSA has no reason to volunteer it unprompted. That’s the single biggest gap in a first-pass streamlined intake for a Canadian client, and it’s the one most likely to surface years later as an unfiled 3520.

The third is treating an RESP as the child’s account when the actual US filer is the parent who opened it. The beneficiary’s name is on the statement, but the subscriber is the one with the reporting obligation, and confusing the two either creates a filing for someone who doesn’t need one or skips a filing for someone who does.

The fourth is skipping FBAR for a registered account on the theory that a retirement or education plan “doesn’t count” as a foreign financial account. It does. FBAR runs on the account itself, not on what the account is used for, and an RRSP, a TFSA, and an RESP are all foreign financial accounts under 31 USC 5314 regardless of their tax treatment.

The fifth is applying the FBAR threshold per account instead of in aggregate. The $10,000 test looks at the combined balance of every foreign financial account someone holds, added together, at any point in the year, not the balance in any single account. A person with an RRSP holding $6,000, a TFSA holding $3,000, and a chequing account holding $2,000 crosses the threshold on the combination even though no single account does, and a preparer who checks each account against $10,000 individually will miss a filing that was actually required.

What does streamlined cost with these accounts?

More than a streamlined filing built around a single foreign bank account, and usually by a wide margin. The gap comes from Forms 3520-A and 8621, both of which multiply per account and per fund, not from the base 1040 or FBAR work.

A Canadian who arrives with an RRSP, a TFSA, and an RESP holding several mutual funds each is paying for a different shape of project than an American abroad with a chequing account and a savings account, even though both are filing the same three years of returns and six years of FBARs. The 1040 preparation itself is roughly comparable between the two. What isn’t comparable is everything downstream of it: each Form 3520-A needs its own trust accounting, each Form 8621 needs its own holding-period and distribution history pulled and tested against the section 1291 default, and none of that work compresses just because several funds sit in the same account.

That’s also why a quote built from account names alone, “an RRSP, a TFSA, and an RESP,” is close to useless without the fund count behind each one. Two households with the identical three accounts can land tens of forms apart depending on whether each account holds one fund or six. The full breakdown of what drives a Canadian streamlined quote, account type by account type, is the place to see where a specific number comes from before committing to anything.

What should I do next?

Pull a current statement for every Canadian account you hold and note two things for each one: what type of account it is, and how many mutual funds or ETFs sit inside it. That single list determines almost everything else, since it tells you which accounts carry the foreign trust question, which ones are treaty-protected, and how many Forms 8621 you’re looking at.

If you haven’t started the underlying filing yet, the Streamlined Foreign Offshore Procedures mechanics are the place to start. Once the accounts are catalogued, confirm your RRSP eligibility for the treaty election, get a real cost estimate built around your actual account mix, and decide on the TFSA cleanup question with what a later cross-border move would do to an RRSP or TFSA in view if that’s realistically on the table.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.