Consider following circumstances:
- I'm a Canadian citizen/resident and had a 2014 income of $160,000
- I have unused RSP contribution room of $70,000
- I'm moving to the US later this year, and will become a US tax resident.
What if I contribute 70K of my income to my RSP today and take the full deduction for 2014, and then liquidate my RSP after I move to the US. My understanding is that there's a flat 25% withholding tax on that withdrawal, so that $70,000 is taxed at 25% instead of the ~38%, saving me approx $9,000(!?)
Am I misunderstanding something?
If not, is this the no-brainer it appears to be?
Any downsides?
Withdrawal from RSP while nonresident>can it be advantage
Moderator: Mark T Serbinski CA CPA
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