Phil Hogan is a Canadian and US CPA working with clients throughout Canada and the US. Phil advises on cross border tax and financial planning matters. Phil can be reached at phil@beaconhillwm.ca or via telephone at 778.433.1314. You can also read more about Phil at www.Beaconhillwm.ca/team/about-phil/
How to transfer US investments to Canada, including ROTH IRA
Question
Hi Phil
We spoke a few years back when my wife and I were planning on moving to Victoria. We put those plans off for a few years but now we’re committing to actually make the move next year.
To give you a recap on our situation…my wife is a dual citizen and I’ve applied for my Canadian PR. We hope to move close to March of next year.
We have the following assets
- House in Washington (our principal residence)
- Investments in ROTH, trad IRA, regular investment account and small company 401k
- 2 cars and other household good
I’ve done a lot of research on what the tax returns will look like when we move, but we’ll certainly need help from someone like you to prepare and file the returns.
Our main questions related to the investments:
- Our current wealth manager says that she can’t hold most of the accounts when we move to Canada. She did suggest using a US relative address to possibly keep the accounts in the US. Does this seem right to you?
- Will we be paying tax on our tax deferred accounts such as the IRA and ROTH when we move to Canada
- We’ll be working for another 10 years before retiring. Should we continue to contribute to our ROTH and trad IRA after we move to Canada?
I know this is a lot to answer so let me know if we need to schedule some time to work through all this.
Thanks again
XXXXXX
Answer
Hi XXXXX
Thanks for the email.
Considering the number of issues outlined above I would suggest that we schedule some time to chat about this issues in more detail. I will however give you some general guidance on the questions above to help with the potential planning:
- That’s correct, unless your US advisor has a dual country license they should not be able to manage accounts for Canadian residents. Simply applying a US address to the account does not only not solve the problem, but it actually against securities regulations.
- Your registered accounts (IRAs and alike) will continue to be deferred from both Canadian and US taxes. That being said, some accounts such as ROTH IRAs require that an election is filed with CRA to ensure the account maintains it’s tax deferred status.
- You certainly won’t be able to contribute to your ROTH while a Canadian resident and although you technically could contribute to your traditional IRA you likely won’t want to as you won’t get a deduction for Canadian purposes. If you’re still working it’s going to be much more tax advantageous to open and RRSP and contribute that way.
Hope that helps a little. The information above is only general in nature and we should chat in detail about your tax and investment planning to ensure all issues are properly covered.
Cheers
Phil
This commentary reflects the personal opinions, viewpoints and analyses of the Beacon Hill Wealth Management Ltd. partner providing such comments, and should not be regarded as a description of advisory services provided by Beacon Hill Wealth Management Ltd. or performance returns of any Beacon Hill Wealth Management Ltd. client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Beacon Hill Wealth Management Ltd. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. Any discussion about taxation is for educational purposes only and should not be viewed as professional advice. Consult your tax professional for tax advice on your particular situation.
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