Today we are discussing Canadian retirement plans such as RRSP and LIRA, and what happens to them when you’re planning to leave Canada or you have left Canada for the United States.
Do you get rid of them?
Do you keep them?
What are your options?
Let’s get into detail.
Can I Keep My Canadian RRSP as a Non-Resident of Canada?
If you are planning to move to the United States from Canada, are in the transition, or if you have moved and you’re wondering what your options are for the RRSP, we can assure you that you can keep the RRSP. You do not not need to close them or transfer them. You can even defer income within those accounts.
This is where the tax treaty kicks in. There is an election we can make in your filing, so your deferred interest and dividends, along with anything in your RRSP are treated without double taxation. You will have the same tax-deferred status in the U.S. as you did in Canada, as long as you file correctly. Typically, it makes the most sense to simply keep the account so you do not incur tax consequences.
Now, what if you wish to transfer them?
Transferring Your RRSP to a U.S. Retirement Account
If you do transfer your RRSP to a U.S. retirement account (like a 401(k) or an IRA), there will be tax consequences. There is some planning to be done around withdrawal, but this type of approach is always unique to the individual, and specific to their circumstances. We get this request all the time.
Know that Cross-Border Tax is Individual
The best approach truly depends on what’s going on in your individual situation. Does it make sense to keep the RRSP? Does it make sense to transfer it to a 401(k)? When is the time to do it? These are questions we are happy to get into detail with you on your specific situation.
We maintain offices in Toronto and Houston, and our team is here to help.
