401K, US Stocks and US Bank Accounts
- Thread starter supreets2
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vpkasbek
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- Nov 22, 2016
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I've asked the same. No response though so far. Better off seeking professional advice from tax advisor familiar with US-Canadian tax laws
http://www.canadavisa.com/canada-immigration-discussion-board/cash-out-401k-or-roll-into-rrsp-t487213.0.html
http://www.canadavisa.com/canada-immigration-discussion-board/cash-out-401k-or-roll-into-rrsp-t487213.0.html
Hi Guys, I am in the process of moving from USA to Canada too. Just gave my IELTS and waiting for the score. Everything else is takes care of (PCC, WES, Employment Letters, etc.)
Being in the USA for 10+ yrs, I was wondering about 401K, IRA (roth and traditional) as well as investment accounts.
Here is some info on moving 401K to Canadian RRSP
www canadianexpatnetwork com/public/1237.cfm
Appreciate if anyone has been through the process and can share real experience.
Being in the USA for 10+ yrs, I was wondering about 401K, IRA (roth and traditional) as well as investment accounts.
Here is some info on moving 401K to Canadian RRSP
www canadianexpatnetwork com/public/1237.cfm
Appreciate if anyone has been through the process and can share real experience.
I did some research on this topic. These two are the most helpful links (though slightly dated):
http://www.finiki.org/wiki/Cross-border_and_expatriate_issues
http://www.finiki.org/wiki/Canadian-US_investing_differences
Specifically to your question:
401k. Your options:
- Leave your account in the US till retirement age and withdraw then. Pay non-resident tax.
- Withdraw all at once: Pay income tax + penalty + tax on gain
- Withdraw little by little and file 1040NR every year: Pay penalty + income tax (lower tax bracket) + tax on gain (lower tax bracket)
Roth IRA. Your options:
- Leave it till you retire. Can't make any transactions.
- Withdraw your principal all at once before you leave the US. Pay no taxes or penalties.
Brokerage accounts:
- Liquidate all investments. Non residents are not allowed to have brokerage accounts.
- If you want to buy US stocks in Canada, you can buy US-ETFs in Canadian brokerages. There are USD and CAD hedged versions if you want to protect against currency fluctuations.
Bank accounts:
- Keep your bank account.
- Keep your credit card.
HSA
- Keep it. It's a huge tax haven!
- Charge your medical expenses anywhere in the world to the HSA. File a 1040NR for all disbursements.
Home/Rental property. Your options:
- Sell it before you leave the US. Capital gains tax is much lower in the US.
- Keep it and declare it as "effectively connected" through a property manager. File W-8ECI and 1040NR.
Transfer money from USA to Canada:
- Don't do a direct bank to bank transfer. Fees are huge!
- Educate yourself and set up a Norbert's gambit. It's the most efficient. (http://www.finiki.org/wiki/Norbert's_gambit)
http://www.finiki.org/wiki/Cross-border_and_expatriate_issues
http://www.finiki.org/wiki/Canadian-US_investing_differences
Specifically to your question:
401k. Your options:
- Leave your account in the US till retirement age and withdraw then. Pay non-resident tax.
- Withdraw all at once: Pay income tax + penalty + tax on gain
- Withdraw little by little and file 1040NR every year: Pay penalty + income tax (lower tax bracket) + tax on gain (lower tax bracket)
Roth IRA. Your options:
- Leave it till you retire. Can't make any transactions.
- Withdraw your principal all at once before you leave the US. Pay no taxes or penalties.
Brokerage accounts:
- Liquidate all investments. Non residents are not allowed to have brokerage accounts.
- If you want to buy US stocks in Canada, you can buy US-ETFs in Canadian brokerages. There are USD and CAD hedged versions if you want to protect against currency fluctuations.
Bank accounts:
- Keep your bank account.
- Keep your credit card.
HSA
- Keep it. It's a huge tax haven!
- Charge your medical expenses anywhere in the world to the HSA. File a 1040NR for all disbursements.
Home/Rental property. Your options:
- Sell it before you leave the US. Capital gains tax is much lower in the US.
- Keep it and declare it as "effectively connected" through a property manager. File W-8ECI and 1040NR.
Transfer money from USA to Canada:
- Don't do a direct bank to bank transfer. Fees are huge!
- Educate yourself and set up a Norbert's gambit. It's the most efficient. (http://www.finiki.org/wiki/Norbert's_gambit)
I am keeping my US bank accounts open, as for 401K, I am leaving it as is because the company that employs me will manage it for free even after I leave
Each persons case will be different, just need to talk to your bank and investment firm and tell them your situation and they will give you options, then you can pick which is best for you
I am in the process of moving to Canada and sold my Condo a month ago. FYI I am on the East coast and summer is the only best time to sell a house and get a good price.
If you have any monetary connection with USA, you are required inform Canadian revenue agency and declare your income in every single tax return. That is a lot of paper work folks. Now, the Canadian banks are very aggressive in determining US connections...
Is that only for income outside Canada, or also any bank accounts/other assets. What if ones wants to keep some US credit cards active, and a checking account with lets say 5K in it?
You need to report your worldwide income when you file Canadian tax return. Retaining a checkin a/c and credit does not mean you have an income, so guess you don't have to....
I don't know anybody who rented house in US while living in Canada, but I know someone who knows many who did that! Many Canadians own rental properties in Florida, it is a well known fact... When it comes to tax matters, it is always better to hire a certified tax consultant.
No need to liquidate stocks! Just open an online brokerage in Canada ( I use interactive brokers canada) and ask them to do an ACATS transfer from your US brokerage. All your stocks will move to Canadian broker and you can keep them. You can also buy US stocks via Canadian brokers.
As for 401k, etc just roll them over to Fidelity IRA. Fidelity allows foreign addresses.
As for 401k, etc just roll them over to Fidelity IRA. Fidelity allows foreign addresses.
So if our house doesn't sell before we move, are we screwed on taxes?
edit for anyone else reading: according to 15miles.info, "If you sold your former primary residence shortly after you became a Canadian resident, you will not owe taxes on the sale." so I'm breathing again!
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No what he is saying that it is better to sell off along with giving up your residency. If you eg: rent out for 2 years while you are away you will need to pay taxes on the rent and then pay the capital gains for the 2 y ears. You will need to get a specialized attorney and appraiser to review your assets 2 years back at that point in time. The attorney will withold 20% - 30% of cash in escrow etc. Pain.