roth ira

jalways747 · Post by **jalways747** » Fri Mar 09, 2012 1:41 pm

can i contribute to roth ira even though i am a non resident of usa ? what do i do if have already contributed ? thanks

nelsona · Post by **nelsona** » Fri Mar 09, 2012 3:02 pm

You can, but if you are living in canada at the time you make such contribution, you have effectively broken the Roth, and it becomes immedaitely taxable in Canada.

There is no way to undo this. You should have consulted someone before doing this.

In general it is never a great idea to make your own contribions to any US IRA plan when living in Canada, as it provides no tax benefit.

In the case of a Roth, the consequence are terrible.

Sorry.

nelsona · Post by **nelsona** » Fri Mar 09, 2012 3:04 pm

In another thread you said you were planning to move to canada.

What's the story?

jalways747 · Post by **jalways747** » Sat Mar 10, 2012 2:38 pm

sorry yes i am planning to move to canada this year but i put money in roth for 2011, that year i was not resident in usa nor canada , for this year 2012 can i put money in roth before i move to canada if i have very little earned income

nelsona · Post by **nelsona** » Sat Mar 10, 2012 4:48 pm

yes, but you must qualify to put roth by filing a 1040 with enough income.

agrisiva · Post by **agrisiva** » Sat Mar 24, 2012 12:47 am

hello Experts, I have already submitted an election regarding my Roth IRA and never contributed anything more to it while being a Canadian resident. Just would like to know, what If I contribute $5000 for 2011 to a new Roth account with a different vendor. I am willing to pay Canadian taxes on that new Roth account, but will the old Roth account be left alone (tax-deferred)? I am going to email this question to CRA, but would like to know if any one already aware of this?

nelsona · Post by **nelsona** » Sat Mar 24, 2012 7:40 am

Why would you do this? The new Roth would not be tax-deffered.

I will look into the effect on your existing Roth, but it is not advisable to do this. CRA would see thru this.

agrisiva · Post by **agrisiva** » Sat Mar 24, 2012 10:44 am

If CRA is ok with that, I am interested in doing this. Main reason is to make sure I donâ€™t lose the IRA Contribution room that I have for 2011. I am ok with paying Canadian taxes on it, because either way that 5000 will sit somewhere and be taxed by US & Canada right. I have plans to go back to US after 3-5 years, if i go back, after that time, it will be purely tax-deferred (no US & Canadian taxes right)

nelsona · Post by **nelsona** » Sat Mar 24, 2012 3:19 pm

I suppose, but if you return to canada it will be taxed again. Why not just put it in a TFSA instead, and remove it when you go back to US?

I might also suggest that you put it in an IRA and then move it over when you are in US. then it is tax-deffered i ncanad and US.

agrisiva · Post by **agrisiva** » Sat Mar 24, 2012 4:45 pm

thx nelsona, yes I am going to have TFSA 5k in canadian $, but trying to see if i can also do roth ira for 5k in US $, which seems to be more important to me as the contribution room is never carried forward like in Canada. If I donâ€™t contribute before April 17, I am going to lose the opportunity for good right. Btw, while i completed my 1040NR, i came to know i donâ€™t qualify for Traditional IRA, if thats what you suggested in your 2nd sentence. Also I never had traditional, always liked Roth more than Traditional.

nelsona · Post by **nelsona** » Sat Mar 24, 2012 11:03 pm

You may have not qualified for DEDUCTIBLE trad IRA, but you can always do non-deductible.

agrisiva · Post by **agrisiva** » Sat Mar 24, 2012 11:45 pm

yes you are right nelsona. I don't qualify for Traditional IRA or even Roth IRA. As a Non-Resident, with income more than $10k, filing separately, lived with the spouse, i don't qualify for Roth either.
Only option now is non-deductible IRA, so i am looking at form 8606 right now, i don't understand though, how this will be useful for me, whats the benefit in doing a non-ded IRA, any ideas??

nelsona · Post by **nelsona** » Sun Mar 25, 2012 5:56 pm

I alreadt told you the advantage: you don't lose the IRA contribution room, and you get to convert it to Roth later, when you are in US.

agrisiva · Post by **agrisiva** » Mon Mar 26, 2012 5:28 pm

Thanks again nelsona. Couple more questions. So such non-deductible trad IRAs are not reportable & non-taxable to CRA? Also can I open one on my spouseâ€™s name as well who doesnâ€™t have any US income and a NRA like me?

nelsona · Post by **nelsona** » Mon Mar 26, 2012 6:01 pm

IRAs always need qualifying income. Since you are not filing jointly with 1040NR, she will not have the required income.

Traditional IRAs are not reported in canada unless you take money out.