Contact UsWhen leaving a company pension plan and electing a deferred pension, how is a cash refund of employee excess contributions treated for tax by Canada and by the US? Is it considered earned income or is it considered a lump sum distribution from a pension plan, and potentially differently by country?
I am a US citizen living in the US.
On leaving my Canadian employer (McMaster University) I didn't make an election regarding the university pension plan, believing it would simply become deferred until retirement.
On investigating this recently I discovered that in addition to the deferred pension, I was eligible to receive a cash refund of excess employee contributions.
For the question above I'd like to know how this 'refund' would treated by the USA and Canada and if the US considers this a lump sum foreign trust distribution and so reported on form 3520.
On leaving my Canadian employer (McMaster University) I didn't make an election regarding the university pension plan, believing it would simply become deferred until retirement.
On investigating this recently I discovered that in addition to the deferred pension, I was eligible to receive a cash refund of excess employee contributions.
For the question above I'd like to know how this 'refund' would treated by the USA and Canada and if the US considers this a lump sum foreign trust distribution and so reported on form 3520.
