Canada Goverment employee, US Perm Resident, and CND RRSP

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neiks
Posts: 6
Joined: Mon May 02, 2005 3:01 am

Canada Goverment employee, US Perm Resident, and CND RRSP

Post by neiks »

I am in the process of obtaining my US "green card" to legally live with my husband and future family in the US. I will be commutting to my government job in Canada. In speaking with my RBC financial rep I was advised that I could contiune to contribute to my Canadian RRSP as long as I maintain a residence in Canada - which I will be. I am hoping that in the future I will take US citizenship and eventually move back to Canada on or before retirement. In browseing other posts I am questioning if I will still be allowed to contribute to my Canadian RRSP while having US residency. I do understand that I will still be considered a Canadian resident for tax purposes but probably won't qualify for Manitoba Health Care. Any other forseeable potential problems I have not thought about?
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You may be allowed to contribute to an RRSP depending on which state you live, and which broker you have.

A phoney Cdn adress should not be used to do this. You should clearly establish where you will live, and then work within the rules. I should point out that managing your account while physically in Canada, like when you are at work, would be acceptable.

The fact that you work for the Cdn Govt will make you a DEEMED resident of Canada even if you live in Borneo, but this is for TAX purposes, not SECURITIES rules, which would be what you/broker would have to follow.

RRSPs in your case, should still be a good tax move for the specific reason that you are GOvt employeee, and thus your Govt wages cannot be taxed in US. Ordinarily, the advantage of RRSPs is lost when having to report in US since there is no deduction on 1040 for RRSP, but because none of your wages will be reported (even though you will file on your husband's joint return) you can continue to lower your Cdn tax liability with RRSP contributions.

Note: you will need to keep good records of your RRSP,espacially its book value when you do become a US taxpayer, and any contributions you make as a US taxpayer, these will eventually come out tax-free in US (taxable in Canada of course).
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
neiks
Posts: 6
Joined: Mon May 02, 2005 3:01 am

Post by neiks »

You may be allowed to contribute to an RRSP depending on which state you live, and which broker you have.
Quote From the North Dakota Securities Department website:
THEREFORE, IT IS HEREBY ORDERED, pursuant to Section 10-04-03(2) of the Act, that the following persons are exempt from the registration requirements of Section 10-04-10 of the Act.


A person who is a resident of Canada, has no office or other physical presence in this state and complies with the following conditions:


Only effects or attempts to effect transactions in securities:


With or through issuers of securities involved in the transactions, or broker-dealers, banks, savings institutions, trust companies, insurance companies, investment companies (as defined in the Investment Company Act of 1940), pension or profit-sharing trusts, or other financial institutions or institutional buyers, whether acting for themselves or as trustees;

With or for a person from Canada who is temporarily present in this state, with whom the Canadian person had a bona fide business-client relationship before the person entered this state, or

With or for a person from Canada who is present in this state, whose transactions are in a self-directed tax advantaged retirement plan in Canada of which the person is the holder or contributor

Does this sound like I will still be able to contibute to my Canadian RRSP?
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

All but 2 or 3 states have bought in to the SEC's requirements, and ND is on-side. This has been an ongoing process that wrapped up 2 or 3 years ago in most states. Considering the snail's paace at which any legislative action get done in US, for 48 states to enact enabling regs for this inconsequential (to them) issue, that is certainly record time.

All Cdn brokerages are aware of who is and is not allowing RRSP-managing.

The problem, at this stage, is not with the state, it's with the Cdn firms.

All but one or two firms have simply refused to deal with US residents. Some will deal with existing costumers under very strict policies. National Bank for example, will only deal with its customers in Florida. RBC Direct has a similar policy. BMO won't open a self-directed account even if you have an existing RRSP with them.

TD Waterhouse is the only current brokerage frim that I knoe of that will accept new customers who are already US residents.

Look for posts by "rickerbucks" on this site; he has written extensively on the compliance issues surrounding this topic.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
neiks
Posts: 6
Joined: Mon May 02, 2005 3:01 am

Post by neiks »

Thanks for the info! Please correct me as I summerize:

Canada source income (Canada goverment employment) - federal income tax exempt in US via article XIX of tax treaty, state tax probably applicable

With Canada source income contiual contribution to my Canadian RRSP is good as it still is a tax liablity on Canadian taxes. I still must report my RRSP on US tax return?

My RRSP are with RBC. Was told by advisor that there was no problem with contibutions as I still maintain a legitamate residence adderess in Canada (not phoney - RBC holds my mortgage with them) and as long as the state I live in (North Dakota) will allow their residents to trade in Canada.

I also hold a USA RBC Centura account - no advantage of purchasing my RSP via them as all my income is Canadian funds and will be at the mercy of fluctuating exchange rates?

Am I correct so far in my summary????
nelsona
Posts: 16664
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

I also hold a USA RBC Centura account - no advantage of purchasing my RSP via them as all my income is Canadian funds and will be at the mercy of fluctuating exchange rates?
American institutions do not sell, manage or know anything about RRSPs. RBC Centura has nothing to do with Canada, anymore than your local Shell gas station has to do with Holland.
I still must report my RRSP on US tax return?
Yes, you must report the contribution, and defer taxation by using form 8891.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
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