Canadian citizen inherited a Roth and Traditional IRA.

[oldgringo]

I'm 74 years old and I have just received inherited IRAs from My mother. A Roth and a traditional IRA. Both IRAs are in stocks. When I sell the stock and bring the money to Canada I think I will have withholding tax of 15% on the traditional IRA and maybe I will owe tax here in Canada. I think the Roth IRA should be tax free in the U.S. and Canada. Any advice or clarification would be greatly appreciated.

[nelsona]

If you collapse the IRA it will be subject to 30% withholding, as it will not be considered periodic. You can sometimes fight this down to 15%, but in any event it will all be taxable in Canada too, so you can use the 30% as a credit.

The Roth distribution will be tax-free in both countries, assuming that the actual Roth account was created more than 5 years ago.

[oldgringo]

Thank you for the clarification! If I cash out the ROTH IRA this year do I still need to file an election to the Competent Authority Services Division this year to make it tax free?

[nelsona]

It would be wise, since you need to report the income and then deduct it on line 256, so the Roth election would be useful to prove the treaty benefit.