Withdrawal from RSP while nonresident>can it be advantage

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markitzero
Posts: 14
Joined: Sat Dec 22, 2012 11:11 pm

Withdrawal from RSP while nonresident>can it be advantage

Post by markitzero »

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?
nelsona
Posts: 18363
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You are exactly right
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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