Does a designated Roth account in a 401k plan require a one-time election under article XVIII paragraph 7 to defer taxation on earnings accrued but not distributed? US citizen, first year residing in Canada.
If I understand correctly, showing that the Roth 401k is a "pension" under XVIII(3) is sufficient to protect distributions per XVIII(1), but is not sufficient to show that an election under XVIII(7) is not required to protect earnings.
I've asked two accountants already. One said the election is not required, the other was less certain: "If it is considered a separate plan [from the traditional 401k], to which your employer did not make contributions, then it is not a 'pension plan' under Canadian rules. In that case, the election is required."
Vanguard (plan administrator) treats the 401k a single "plan" with multiple "sources" (direct Roth, pre-tax, employer match, backdoor Roth in-plan conversions); the sources are separately tracked but all on one statement. So it would seem strange for CRA to consider the Roth sources a separate "plan"... but possible?
Interested in hearing other opinions here.
one-time election required for Roth 401k?
Moderator: Mark T Serbinski CA CPA
Re: one-time election required for Roth 401k?
ALL Roths, whether they be self-funded, self-administered or company funded/administered, need to have a statement filed with CRA with the first tax return one files as a Cdn resident.
No need to argue about angels on the head of a pin on this:
https://www.canada.ca/en/revenue-agency ... ws-43.html
Typically, 401(k)'s are managed as one account, but most certainly the funds inside are segregated into Pre-tax and after tax (both in contributions and growth), so it is "separate". proof of this is that when you levae your firm, it is always suggested to split off the Roth portion to avoid taking unexpected withdrawals from one or the other.
No need to argue about angels on the head of a pin on this:
https://www.canada.ca/en/revenue-agency ... ws-43.html
Typically, 401(k)'s are managed as one account, but most certainly the funds inside are segregated into Pre-tax and after tax (both in contributions and growth), so it is "separate". proof of this is that when you levae your firm, it is always suggested to split off the Roth portion to avoid taking unexpected withdrawals from one or the other.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: one-time election required for Roth 401k?
And this election is to conform with the treaty, which protects Roth only to the extent that no "Cdn contribution" is made.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing