Once you become a US resident, the US tax on foreign retirement accounts follows you: a US resident is taxed on worldwide income, and an Indian provident fund or Canadian registered plan does not automatically keep its home-country tax shelter on a US return. The rules differ by account type, by treaty and by whether the IRS has issued guidance. For Canadian RRSPs and RRIFs there is clear relief. For Indian EPF, PPF and NPS accounts there is no IRS guidance, so documented positions matter. This page explains the framework; our RRSP, RRIF, TFSA and RESP guide goes deeper on Canada.
How does US tax on foreign retirement accounts work?
Under US domestic law, a resident who benefits from a foreign retirement plan is generally taxed currently on income accruing inside it, even if the plan pays out nothing, unless the plan is a foreign employees' trust that qualifies for special treatment. The 1040 instructions say you may have to report undistributed earnings of a foreign retirement plan, point Canadian registered plan holders to Rev. Proc. 2014-55, and direct pension distributions to lines 5a and 5b. Treaties can override this in specific cases.
Account-by-account view
| Account | US income tax picture | Main reporting |
|---|---|---|
| Canadian RRSP or RRIF | Deferral until withdrawal under the treaty and Rev. Proc. 2014-55 for eligible individuals | FBAR; Form 8938 if over threshold; no Form 3520 or 3520-A |
| Canadian TFSA | No treaty deferral as we read Article XVIII(7); growth is usually taxable annually; trust status is a risk | FBAR; Form 8938; possible Forms 3520 and 3520-A |
| Canadian RESP | No treaty shelter for income inside, as we read it; Rev. Proc. 2020-17 relieves trust reporting only | FBAR; Form 8938 |
| CPP and OAS benefits | Treated for US tax as if they were US Social Security benefits | Form 1040 Social Security Benefits Worksheet |
| Indian EPF | No IRS guidance; employer and employee contributions and interest may be taxable currently | FBAR and Form 8938 positions to be documented |
| Indian PPF or NPS | No IRS guidance; commonly treated as taxable annually | FBAR and Form 8938 positions to be documented |
| NRE, NRO or fixed deposit | Interest taxable once you are a resident, even if exempt in India | FBAR; Form 8938; Schedule B |
| Indian mutual fund | Usually a passive foreign investment company | Form 8621; see our PFIC guide |
| Life insurance or ULIP with cash value | Reportable; tax depends on the contract | FBAR; Form 8938 |
Publication 519 explains that, under the treaty with Canada, social security benefits received by a US resident from Canada are treated for US tax as if received under US Social Security legislation. You include them in the Social Security Benefits Worksheet and need not file Form 8833 for them.
How to handle foreign retirement accounts, step by step
- List every account from your last residence country: employer plans, government schemes, personal plans, insurance policies. Include joint and nominee accounts.
- Fix your US residency start date with the residency tests. Income earned before it is usually outside US tax.
- Classify each account as an employer plan, personal retirement account, savings account or investment fund.
- Choose the treaty or domestic position and record the reason in a memo.
- Report distributions on Form 1040 lines 5a and 5b, and report any accrued income your position requires.
- File the disclosures: the FBAR electronically with FinCEN, Form 8938 with your return, and Forms 3520 and 3520-A where no exemption applies.
- Claim foreign tax credit on Form 1116 for Indian or Canadian tax withheld on distributions, where the credit rules allow.
- Re-check each year, because contributions, rollovers and plan changes alter the answer.
Using US retirement plans as a newcomer
You can contribute to a 401(k) from your first US paycheck. The IRS limits for elective deferrals are $23,500 for 2025 and $24,500 for 2026, with catch-up contributions of $7,500 (2025) and $8,000 (2026) for those eligible, and the IRA limit is $7,000 for 2025 and $7,500 for 2026. A traditional IRA deduction may be reduced if you have a workplace plan, and a nonresident needs US-connected compensation. US IRAs and 401(k) accounts are not foreign accounts, so they are not reported on the FBAR.
Documents you need
- Account statements and year-end balances in local currency for each account
- EPF passbook or UAN statement, PPF passbook, NPS statement
- Canadian RRSP, RRIF and TFSA statements and T4RSP, T4RIF slips
- Employer plan documents showing who contributed and when
- Records of contributions made before and after your US residency start date
Deadlines and penalties
The FBAR for 2025 was due April 15, 2026 with an automatic extension to October 15, 2026; the 2026 FBAR is due April 15, 2027. Form 8938 is due with the return, and a missed Form 8938 draws a $10,000 penalty with possible additions. Form 3520 and 3520-A penalties start at the greater of $10,000 or a percentage of the trust's assets or distributions. See the FBAR, Form 8938 and Forms 3520 and 3520-A guides.
Country and Illinois notes
- Canada: your Canadian CPA reports the RRSP or TFSA at home. Link the two sides through the Canadian RRSP guide and the CPP and OAS guide.
- India: the Indian CA confirms the plan's status and any withdrawal taxes; our NRE, NRO and FCNR guide covers bank accounts.
- Illinois: Illinois subtracts certain retirement income and federally taxed Social Security on Line 5 of Form IL-1040. Whether a foreign plan qualifies is decided under Illinois rules, so we check it plan by plan.
Worked examples
Divya, Toronto to Naperville. She holds an RRSP worth US$130,000 and a TFSA worth US$40,000 at year-end and is single. The accounts exceed $10,000 for the FBAR, and her $170,000 of foreign assets exceeds the $50,000 end-of-year threshold for Form 8938. The RRSP is reported but its undistributed growth is deferred. The TFSA's interest and gains are reported on her US return, and we review whether TFSA trust reporting applies.
Rajesh, Bengaluru to Aurora. He has an EPF balance of about US$60,000 and a PPF balance of about US$18,000. Whether EPF and PPF are reportable foreign financial accounts is a judgment call; we document the position, report distributions when received and keep his Indian CA informed so credits match.
Mistakes to avoid
- Assuming a TFSA or PPF is tax-free in the United States.
- Skipping the FBAR because the account earns no taxable interest.
- Filing Form 8891, which is no longer required for RRSP and RRIF holders.
- Treating Rev. Proc. 2020-17 as an income tax exemption. It only relieves trust information reporting.
- Moving money between plans without checking US consequences.
How we can help
Our firm in Aurora, Illinois reviews your Indian and Canadian retirement and savings accounts, documents the US position, and prepares the FBAR, Form 8938 and return. We coordinate with your Canadian CPA or Indian CA so the three filings agree. See our foreign account and asset reporting and cross-border tax services.
Frequently asked questions
Is my RRSP taxed in the US while it grows?
For eligible individuals, no. Under Rev. Proc. 2014-55 the treaty deferral is treated as elected automatically, and tax applies on withdrawal.
Do I have to report my EPF on the FBAR?
The IRS guide says foreign financial accounts include any other account maintained at a foreign financial institution. Because EPF structure is unusual, we review it before deciding.
Can I transfer my Indian EPF into a US IRA?
No simple rollover exists between those systems. Withdrawals are taxed under the rules above.
Does Form 8938 include my pension?
Yes if it is a specified foreign financial asset above the threshold. If you do not know its value, the instructions use distributions received that year.
Official sources
- IRS: Instructions for Form 1040 (2025), foreign retirement plans
- IRS: Revenue Procedure 2014-55, Canadian retirement plans
- IRS: Revenue Procedure 2020-17, tax-favored foreign trusts
- IRS: FBAR Reference Guide (Publication 5569)
- IRS: Retirement plan limits for 2026 and 2025
This page summarizes public guidance in plain language. If anything here differs from the official source, the official source controls.
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.