I am a resident of Canada and work for a US company (not very unique i'm sure). My company will contribute 3% of my salary to a 401K and match up to an additional 6%.
First the 3% received for doing nothing. Is this considered a pension on the US W2 and result in the automatic 10% of gross income to be reduced from allowable RRSP contribution. The 3% is tax protected in th US but is it added to gross income for Canadian taxes?
If I contribute to get the company match how does this affect the above questions?
When the money is removed how is it taxed? in Canada and in the US?
What is the right tax / investment strategy? Help!
401K
Moderator: Mark T Serbinski CA CPA
Anything YOU contribute to your 401(K) will be taxable in canada, by adding it to the wage figure on your W-2. The firm's contribution will not be reported. You will be subject to PA adjustment. None of it is reported in US (in fact it will not even show up on your W-2 wage box)
When you withdraw from the 401(K) in the future, all of it will be taxable in US, and the portion that is more than what you contributed (in other words, the firm's input and all growth).
You *might* consider doing the contribution to get matching, but no more.
An even better approach would be to have your firm allow you to contribute to an RRSP and have them give you the matching to put in it.
When you withdraw from the 401(K) in the future, all of it will be taxable in US, and the portion that is more than what you contributed (in other words, the firm's input and all growth).
You *might* consider doing the contribution to get matching, but no more.
An even better approach would be to have your firm allow you to contribute to an RRSP and have them give you the matching to put in it.
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