Leaving US.. what should I do with 401k?

[eortlund]

No, it was not done while we were in Canada--my husband was studying in Scotland at the time. Each IRA was about $7000-8000. What do you mean, about the Roth income not being sheltered? While we were in Scotland, we were doing the Foreign Earned Income Exemption on our taxes. My tax lawyer later went back and revised those to the Foreign Tax Credit--not sure what happened as far as the Roth and if we paid taxes when he revised them. But he is an international tax lawyer so I'm sure whatever he did, it was legal.

[quote="nelsona"]eortlund,

Dubious strategy assuming you moved to Canada. This conversion, while perhaps triggering no US tax (must have been a small IRA), was to be reported as income in canada in the year of the conversion, and the Roth income is not sheltered, now or later.


cfn2007,

As the article pointed out, the datils will come. Howevder, since Roth will be recognized as a pension, it should be taxed the same as in US (which is ZERO), except where indicated in the new treaty, whicc is wehn funded after becomeing resident of canada (like eortlund did).
To benefit from Roth, one would need to convert BEFORE leaving.[/quote]

[nelsona]

Currentlt, the growth inside your Roth is NOT tax defferred for residents of canada, so you should have been reporting any dividends, cap gains, etc on a yearly basis. This will change with the new treaty.

As to your conversion done while residnet in Britain, you would have to consult with Inland revenue on that as to how they would have treated this conversion -- my comments applied to doing the conversion while in Canada.

That is why I said " Dubious strategy assuming you moved to Canada".

[eortlund]

[quote="nelsona"]Currentlt, the growth inside your Roth is NOT tax defferred for residents of canada, so you should have been reporting any dividends, cap gains, etc on a yearly basis. This will change with the new treaty.

As to your conversion done while residnet in Britain, you would have to consult with Inland revenue on that as to how they would have treated this conversion -- my comments applied to doing the conversion while in Canada.

That is why I said " Dubious strategy assuming you moved to Canada".[/quote]

Thanks for the info. I have a couple follow-up questions. You say the growth in my Roth is not tax deferred. But just as the US does not tax foreign earnings up to $80,000 or whatever it is, is there a similar rule in Canada? Will they tax my Roth earnings if those Roth earnings total $1000 in a given year?

Can you explain what the new treaty is and how it changes things?

I don't know if the UK would have cared about this or not. I didn't even have to file taxes there, as is true of most UK residents--it's just automatically done through your work payroll.

[nelsona]

Canada has no foreign earned income exclusion, simply because canada does not tax foreign residents, while US taxes its citizens everywhere.

You would report the income just like from any other investment account.

With the new treaty (to be ratified) Roths will be treated the same as in US, so long as you do not fund them while living in canada.

While most british residnet do not submit income tax report, they are supposed to accurattely report all income, incuding foreign, when determining their withholding, thus you probably got atway with one.

[eortlund]

Why does Canada want to know about foreign investment income then? If there never comes a point when they tax it?

[nelsona]

All income, foreign or otherwise, is reportable and taxable for Cdn residents.

Where did you get the notion that it wasn't?!