What do you need to know about inheriting an IRA from a US relative?
Is it taxable? Yes, but only to the extent that the IRS doesn't tax it
What does that mean? You will need to file a US tax return declaring that income per IRS regulations (contact a CPA that works with non resident US filers). Any tax that is assessed on that return is then determined to be an input tax credit on your Canadian return. This ITC than reduces the tax burden dollar for dollar (converted to CAD funds) on your Canadian T1 tax return.
What else do you need to know? Find a CPA that works with Canadians filing this type of return to determine your legal requirements for reporting to the IRS. Get a letter from the estate of the deceased stating the amount of your portion as well as any fees that you have to pay and in what currency, also in what form you will be receiving this payment (ie cheque, direct deposit, wire etc.). You will need to keep this letter for 7 years after filing the return in which it is reported.