Converting 401K to annuity, USC / Canadian resident

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stewak2
Posts: 111
Joined: Mon Sep 18, 2006 2:47 pm

Converting 401K to annuity, USC / Canadian resident

Post by stewak2 »

USC, Canadian resident, Canadian spouse
Considering at retirement, buying an annuity with my US 401K, with spousal benefits ( benefits paid till death of both parties ).
Looking at this partly because with Fidelity, anyway, with a Canadian beneficiary of 401K, upon my death spouse would have to collapse it and take lump sum payout and associated tax, vs continuing to receive the annuity payments which would be taxed a lower rate over time.
Any reason NOT to do this? ( I am aware of the issues with annuities in general ).
I have been told that such annuity income would not be eligible for pension splitting, but other posts here seem to indicate CRA would in fact allow it, which would be another reason to take this path.
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