I have been working in the u.s. for 15 years but have always been a Canadian resident. Ten years has been with the same company of which I have had a 401 k. I have about 10 years until retirement but I am concerned how I will be able to pull this money out. I know I will be taxed by the u.s. (b/c pre tax dollars were used in their eyes) for monies withdrawn but somebody told me recently that Canada will now also be taxing me on this income even though it is post tax dollars (as far as canada is concerned b/c I have paid tax on the money deposited in the 401k).
Just discovered this site and i will now use often. Thanks in advance.
Canadian resident, employed in U.S., dual citizen
Moderator: Mark T Serbinski CA CPA
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soon2bcanadian
- Posts: 1
- Joined: Fri May 28, 2010 6:02 pm
- Location: sarnia
Since you have been working all these years in US AND living in Canada, you have, by law until 2008, been including your 401(k) contributions on your Cdn return as income (ie. increasing your wages shown on your W-2 by the amount you contributed).
By doing this you have builtt up a tax-free portion of your 401(k) in Cdn terms. The portion which YOU contributed, but did not get a tax deduction for will eventually come out tax free. All else will be taxble in canada: the employer contributions, and the growth.
Now, since 2009, and the latest treaty, canada gives a tax deduction for your 401(k) contributions, taken as part of your RRSP contribution room.
See the form you should have submitted with your 2009 return:
http://www.cra-arc.gc.ca/E/pbg/tf/rc268/README.html
Since it is now deductible, you will no longer be building up any tax-free amount in your 401k). Only the portion YOU contributed, prior to 2009, will be tax-free.
Of course, should you move to US when you retire, none of your 401(k), CPP, SS or OAS will be taxable in Canada.
By doing this you have builtt up a tax-free portion of your 401(k) in Cdn terms. The portion which YOU contributed, but did not get a tax deduction for will eventually come out tax free. All else will be taxble in canada: the employer contributions, and the growth.
Now, since 2009, and the latest treaty, canada gives a tax deduction for your 401(k) contributions, taken as part of your RRSP contribution room.
See the form you should have submitted with your 2009 return:
http://www.cra-arc.gc.ca/E/pbg/tf/rc268/README.html
Since it is now deductible, you will no longer be building up any tax-free amount in your 401k). Only the portion YOU contributed, prior to 2009, will be tax-free.
Of course, should you move to US when you retire, none of your 401(k), CPP, SS or OAS will be taxable in Canada.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
If it makes you feel any better, if you have lived all these yerars in US and then moved to canada, all the 401(k) would be taxable in US and Canada.
At least in your case you get soem relief because you did not get a deduction.
I'm trusting that you correctly bumped up your wgaes every year with youe 401(K) contrib. That is the only way to claim any of it as tax-free later.
At least in your case you get soem relief because you did not get a deduction.
I'm trusting that you correctly bumped up your wgaes every year with youe 401(K) contrib. That is the only way to claim any of it as tax-free later.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best