I suppose the DB could be more generous to account for double taxation… but I‘m a bit confused about the statement quoted above.
The tax withholding should have no net effect on the total amount of taxes… When you file your tax return anything extra would be refunded and anything under would be payable.
(In theory, if they know you’re going to be taxed on the contributions, they would withhold the same amount that they would on regular income. If the contributions were going to be tax deferred (apparently not in this case) then they would reduce the withheld taxes.)
Feel free to not respond if this isn’t helpful… If you’re absolutely clear on what’s happening then I don’t want you to spend your time explaining American taxation to a Canadian taxpayer!!