RRSP and Cash

taxisnotmything · Post by **taxisnotmything** » Thu Nov 13, 2014 2:02 am

Moved from Canada to US in 2011 under TN and received GC in 2013. Non-resident of Canada since first year. Have been filling US only except for the first year.

I have an RRSP account in Canada which is reported to IRS each year. The RRSP broker in Canada allows stock transactions (buying/selling) within the RRSP.

I also have a Bank account with cash in it. This is reported each year (cash balance as of end of year + interest gains). My RRSP broker (different than where the bank account is) tells me he cannot do anything (buying/selling) with this cash unless it would be in an RRSP.

What are my options to invest the cash in the bank account?

(1) Transfer the cash to the U.S. and invest using U.S. brokerage house. Not the best since current US/CDN exchange rate not in favor.

(2) Transfer cash from Bank to my RRSP (i still have some room), and then invest it through broker. But won't this be double taxed (taxed once since this is cash, and then taxed again once it is withdrawn from RRSP at retirement)?

(3) Other options?

Thank you.

nelsona · Post by **nelsona** » Thu Nov 13, 2014 8:30 am

The bank is correct that the only investment accounts you can hold must be retirement accounts, and even then, only with brokers that are licensed to deal with you while in US.

If you want to invest you will need to do this with a US broker.
The exchange rate doesn't matter, since you will be investing in US. It only matters when you exchange it back, that will determine if the rate was good or not.

You should only have bank account in Canada for occasional transaction purposes, not for saving.

I would not put it n RRSP since you will not benefit from deduction. And I doubt your broker would accept new funds into your account because you are in US.

taxisnotmything · Post by **taxisnotmything** » Fri Nov 14, 2014 12:34 am

Thank you.

Besides RRSP, what are the other types of retirement account i can have while i am in the US?

Broker seems to be willing to accept the cash as long as it is transferred to a RRSP, but then i will not benefit from the deduction as you mentioned and will be further taxed once it is withdrawn at retirement. Bad idea.

I think the exchange rate does matter if i plan on eventually using these funds while in the US, thus the reason why it is sitting in a bank account in Canada.

nelsona · Post by **nelsona** » Fri Nov 14, 2014 11:10 am

No. And as I said, you shouldn't add to your current RRSP.
Time to bring the money to US.

We cab debate the current exchange rate if you wish (what makes you think itr will get better, and such), but your the one complaining that it is in cash in Canada, not me.

But when you convert it and use it in US, the exchange rate no longer matters. And you will now be able to invest in things that (a) grow (not like cash) and (b) possibly grow tax free (like your home, your Roth, etc).