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This doesn't make any sense.

I wonder if anyone could explain this to me? In order to make an RRSP contribution in the 1st place, it must be done with income earned in Canada. Therefore, why would the US government have any interest in accounts generated from exclusively Canadian earned sources?

The "irrevocable election" to defer them sounds like you're saying "Here's my RRSP $$$ in Canada, now I'll be quiet for the rest of my life. See ya" to Uncle Sam. Again, if this is an option, whynot just forgo the whole mess? Why have form 8891 at all? What's the point?

It's for if you ALREADY have the RRSP before you move to the USA. If you choose to keep the RRSP in place when you move to the USA then you have to declare any future income generated within the plan. The 8891 allows you to elect to defer tax on the income by invoking the US-Canada tax treaty. The RRSP is a creature of the Canadian Government and is not automatically recognized as a tax sheltered plan outside of Canada.
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