CDN moving back to CAD from USA. With IRA & RRSP

Income tax policy, rules, problems, strategy and software. Property and consumption taxes too.
Post Reply
Rusty
Newcomer
Newcomer
Posts: 2
Joined: 20 Feb 2016 13:09

CDN moving back to CAD from USA. With IRA & RRSP

Post by Rusty »

Hi
I'm a CDN citizen living in USA with Perm Resid Status (US green card), for the past 6 years. I'm planning to move back to Canada sometime this summer (for a new job). 49yrs old, married w kids. With this scenario I don't plan to move back to the USA.

Portfolios -
Canada - $500,000 CDN RRSP with Manulife Personal Plan in various MutFunds, $150,000 Cash in CDN bank account.
USA - $170,000 USD in Traditional IRA registered account. $10,000 in unregistered Brokerage stock investing account. Both w/Fidelity.
USA house to sell with $500,000 USD Equity.

1. Within my IRA, investments are US Stocks and an Index fund. I can invest in just about anything I want in my IRA. When I move to Canada, can I continue managing my IRA investments being a non-resident of the USA. I'm pretty sure I can?

2. Rather than cash in my IRA, pay the taxes, and move what is left to Canada; I intend to leave this in the USA, continue growing this account until the retirement age for no penalty withdrawal (59 1/2). Then start taking distributions in my golden yrs and file a USA tax return, paying xx% tax to the IRS. Does it work this way? Does this make sense ?

4. Would I be better off cashing in my IRA, pay the early withdrawal penalty, and income tax, in order to transfer what is left to Canada and benefit from the US/CAD currency exchange. Then take this money and open a non registered Brokerage account in Canada (TD for example) and start buying US stocks again?

5. Same questions on my unregistered typical USA brokerage account? Leave it in USA, or liquidate an transfer $ to CAD?

6. My understanding with my Canadian RRSP's I currently have with Manulife is essentially frozen there until I move back to Canada. I can't move those to another facility like TD Waterhouse until I move, correct? If I'm correct, when I do move back to Canada what options do I have to move my RRSP funds to a facility that enables me to invest in US stocks, ETF's, etc. ? Can I or do I only have the option to ever invest this money in Mutual Funds? FYI when I left my USA company this year, I transferred my 401K (mutual funds) into a traditional IRA that enables me to do what I'm asking with this question.

7. Plan to sell my house, transfer all equity to Canada through the banking system. Any recs on maxing out this exchange?

I really appreciate this web site and appreciate any advice you're willing to provide.
Thank you
Rusty
User avatar
Norbert Schlenker
Veteran Contributor
Veteran Contributor
Posts: 7952
Joined: 16 Feb 2005 09:56
Location: An Argument Surrounded By Water
Contact:

Re: CDN moving back to CAD fr USA. With IRA & RRSP

Post by Norbert Schlenker »

Rusty wrote:Hi
I'm a CDN citizen living in USA with Perm Resid Status (US green card), for the past 6 years. I'm planning to move back to Canada sometime this summer (for a new job). 49yrs old, married w kids. With this scenario I don't plan to move back to the USA.
Ditch the green card as soon as you can. Otherwise you'll deal with the IRS for life. Read this. File the right paperwork.
Portfolios -
Canada - $500,000 CDN RRSP with Manulife Personal Plan in various MutFunds, $150,000 Cash in CDN bank account.
USA - $170,000 USD in Traditional IRA registered account. $10,000 in unregistered Brokerage stock investing account. Both w/Fidelity.
USA house to sell with $500,000 USD Equity.

1. Within my IRA, investments are US Stocks and an Index fund. I can invest in just about anything I want in my IRA. When I move to Canada, can I continue managing my IRA investments being a non-resident of the USA. I'm pretty sure I can?
Depends who holds the IRA. The financial institution may want nothing to do with a Canadian resident. Call and ask. Better yet, have a friend call and ask.
2. Rather than cash in my IRA, pay the taxes, and move what is left to Canada; I intend to leave this in the USA, continue growing this account until the retirement age for no penalty withdrawal (59 1/2). Then start taking distributions in my golden yrs and file a USA tax return, paying xx% tax to the IRS. Does it work this way? Does this make sense ?
It works this way, if the financial institution will keep the account. The US will take tax, and Canada will take some on top of that (though you get credit for what the US takes).
4. Would I be better off cashing in my IRA, pay the early withdrawal penalty, and income tax, in order to transfer what is left to Canada and benefit from the US/CAD currency exchange. Then take this money and open a non registered Brokerage account in Canada (TD for example) and start buying US stocks again?
Hard choice with a US$17k penalty on the line. What's simplification worth to you?
5. Same questions on my unregistered typical USA brokerage account? Leave it in USA, or liquidate an transfer $ to CAD?
Liquidate and bring it to Canada. You can turn into CAD if you want or leave as USD.
6. My understanding with my Canadian RRSP's I currently have with Manulife is essentially frozen there until I move back to Canada. I can't move those to another facility like TD Waterhouse until I move, correct? If I'm correct, when I do move back to Canada what options do I have to move my RRSP funds to a facility that enables me to invest in US stocks, ETF's, etc. ? Can I or do I only have the option to ever invest this money in Mutual Funds? FYI when I left my USA company this year, I transferred my 401K (mutual funds) into a traditional IRA that enables me to do what I'm asking with this question.
Any Canadian discount broker will (1) happily take your RRSP from Manulife and (2) let you buy US stocks or ETFs in the account.
7. Plan to sell my house, transfer all equity to Canada through the banking system. Any recs on maxing out this exchange?
Sell the house and close before you move, because you don't want to be a non-resident vendor. Move the funds as USD from your US bank to a Canadian USD bank account, either via wire or simply by depositing a personal check into a Canadian USD account. (Do not carry a certified check or bank draft over the border.) If you then need to change USD to CAD, do it in Canada. I recommend this technique.

P.S. Read http://www.financialwisdomforum.org/for ... ?f=29&t=17
Nothing can protect people who want to buy the Brooklyn Bridge.
Rusty
Newcomer
Newcomer
Posts: 2
Joined: 20 Feb 2016 13:09

Re: CDN moving back to CAD fr USA. With IRA & RRSP

Post by Rusty »

Hi Norbert
Great advice on all of my questions. Thank's especially for the info on Expatriation Tax, Norbert's Gambit, and Transferring funds from US$ in USA to US$ in CAD. Very useful. Take Care. R
Rysto
Contributor
Contributor
Posts: 125
Joined: 10 Nov 2010 21:16

Re: CDN moving back to CAD fr USA. With IRA & RRSP

Post by Rysto »

Norbert Schlenker wrote:Liquidate and bring it to Canada. You can turn into CAD if you want or leave as USD.
Is liquidating the right move? I thought that leaving the US was not a deemed disposition in US tax law, so if you can get the assets out in-kind you avoid capital gains taxes?
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33314
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: CDN moving back to CAD fr USA. With IRA & RRSP

Post by AltaRed »

Rysto wrote:
Norbert Schlenker wrote:Liquidate and bring it to Canada. You can turn into CAD if you want or leave as USD.
Is liquidating the right move? I thought that leaving the US was not a deemed disposition in US tax law, so if you can get the assets out in-kind you avoid capital gains taxes?
You suggest the OP go through all the obstacles, machinations and agony to save potential gains on a measly $10k in assets? It may cost more to transfer in kind than to pay any outstanding cap gains taxes.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
CanadianinNY
Newcomer
Newcomer
Posts: 3
Joined: 22 Aug 2017 11:48

Re: CDN moving back to CAD from USA. With IRA & RRSP

Post by CanadianinNY »

Norbert, I'm wondering about your RRSP advice. I'm a Canadian resident living in the US right now, paying stupid amounts - about 2%/per year for my RRSPs through my broker. I'd love to transfer to a Questrade or some other discount online broker, but I'd understood that moving around RRSPs once I got to the US was not so simple - some said I couldn't buy ETFs, that what I could get was severely limited, that I had to have a broker who was also registered in my state (NY).... From your understanding, should I be able to just transfer over to a Questrade, invest in ETFs and be done with it? Thanks for any insights you may have!
Post Reply