401k vs RRSP vs EPF: Cross-Border Retirement Planning in Three Countries

401k vs RRSP vs EPF is the question that comes up when someone has worked in all three countries: a 401(k) from a job in Illinois, a Registered Retirement Savings Plan from a posting in Toronto and an Employees' Provident Fund account from the first job in Bengaluru or Pune. Each is a tax-favoured retirement savings vehicle at home, but a plan that is tax-deferred in its own country is not automatically tax-deferred in the other two. The U.S. in particular treats foreign plans differently from its own, and it taxes citizens and residents wherever they live.

401k vs RRSP vs EPF: how do the three plans compare?

How does the U.S. tax each foreign plan?

RRSP and RRIF. Under Article XVIII(7) of the Canada-U.S. treaty and Revenue Procedure 2014-55, a U.S. citizen or resident is treated as having elected to defer U.S. tax on undistributed income in a Canadian retirement plan. No Form 8891 or Form 3520/3520-A is required, but the revenue procedure says it does not affect FBAR or Form 8938. Distributions are taxed in full in the U.S. when received. Our RRSP, RRIF and TFSA guide covers the details, and the TFSA is outside the scope of that relief.

EPF, NPS and PPF. The IRS has not, to our knowledge, issued guidance on these plans by name. Revenue Procedure 2020-17 exempts certain tax-favored foreign retirement trusts from Form 3520 and 3520-A reporting if they meet conditions on tax treatment, annual reporting, contribution limits, withdrawal restrictions and non-discrimination, but it does not decide income inclusion, FBAR or Form 8938. Whether an Indian plan meets those conditions is a case-by-case question. The Form 8938 instructions say an interest in a foreign pension plan is reportable and set out how to value it: fair market value if known, otherwise the distributions received, or zero if none. The treaty's pension article (Article 20) covers periodic pensions but yields to the saving clause for U.S. citizens and residents. See also U.S. tax treatment of foreign retirement and savings.

U.S. plans seen from Canada and India. A 401(k) or IRA is not a Canadian RRSP, and Canada and India each have their own rules for a resident who holds a U.S. plan. Your Canadian CPA or Indian Chartered Accountant confirms those. Do not cash out a 401(k) when you move without modelling the tax in the new country.

What happens when you move?

1. To the U.S. from India or Canada: from your first resident year, the foreign plans become reportable. Decide the EPF position, and check that an RRSP is treated under the treaty.
2. From the U.S. to India: the 401(k) stays in the U.S.; plan withdrawals around the years in which you are "not ordinarily resident" in India. See moving from the US to India.
3. From Canada to the U.S.: keep the RRSP unless there is a reason to collapse it, and compare the Canadian non-resident withholding on withdrawals with your U.S. tax. Our RRSP, TFSA and RESP explainer covers the Canadian side.

Social Security and public pensions

The Social Security Administration's status page lists a totalization agreement with Canada (effective August 1, 1984) and none with India. Practically, the U.S. work record and the Canadian record can be combined for eligibility, while Indian provident fund contributions are separate and not coordinated. For the Canadian side, see CPP, OAS and pensions for immigrants and the US-Canada totalization guide.

Step by step: audit your three retirement accounts

1. List each plan: country, provider, account number, owner, balance and currency.
2. Classify each: employer plan, individual plan, government scheme, or pension.
3. Record contributions and withdrawals by year, with receipts.
4. Decide the U.S. tax position for each foreign plan with your CPA.
5. Add the plans to your reporting schedule: FBAR if an account at a foreign institution, Form 8938 for pension interests. See the three-country reporting comparison.
6. Review beneficiaries and nominees.
7. Re-run the review every time you move.

Worked example

Meera lives in Aurora, is unmarried and a U.S. resident alien. She has a 401(k) of $150,000, an RRSP of CAD 90,000 (about $65,000) and an Indian EPF of about $35,000. The 401(k) is a U.S. account and is not reported on Form 8938. The RRSP is treated under the treaty deferral and has no Form 3520, but it counts for the FBAR, because accounts exceed $10,000. For Form 8938, the RRSP and EPF interests total about $100,000, which passes the $50,000 year-end threshold for an unmarried taxpayer living in the U.S., so she files Form 8938. She and her CPA decide a consistent U.S. position for the EPF. All amounts are hypothetical.

Mistakes to avoid

• Assuming an EPF is automatically tax-deferred in the U.S.
• Cashing out the RRSP without checking Canadian withholding and the U.S. tax on the full amount.
• Leaving old plans off the FBAR or Form 8938 because they feel like "retirement".
• Assuming a TFSA is tax-free for U.S. purposes without checking.

How we can help

For families in Aurora and the Fox Valley, we review each foreign plan for U.S. reporting and tax, prepare FBAR and Form 8938, and coordinate with your Canadian CPA and Indian Chartered Accountant on withdrawals and moves. See our foreign account and asset reporting and cross-border tax services. We cannot guarantee a particular tax outcome.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.