IRA management for Canadian residents

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

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Ohw
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Joined: Sun Mar 24, 2019 7:41 pm

IRA management for Canadian residents

Post by Ohw » Sun Mar 24, 2019 8:10 pm

I need help!

I just retired after 30 years in the US and will move back to Canada. My life savings are in various US mutual funds in 401k and rollovers accounts with Fidelity, Vanguard and Wells Fargo.

It seems like most firms will not allow you to manage your accounts without a US address. Vanguard will allow maintaining a rollover account (designated class TA) where you can hold mutual funds as long as you maintain a US bank account where you can make distributions. But, will not permit you to exchange funds without a US address.

Wells Fargo will simply freeze your account if you no longer have a US address.

Fidelity, however, informed us that being a resident of Canada will not put any restrictions on your IRA account. The representative I talked to, said that Canada is an exception, so you can live in Canada and still manage your US IRA account with Fidelity without a US address. He even said that if you live in any other country, say Mexico or Switzerland, Fidelity will restrict your account activity. But Canada is an exception!

This made me wonder if anyone else have a similar experience and is managing their Fidelity IRA while residing in Canada.

I appreciate any relevant advice.

nelsona
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Re: IRA management for Canadian residents

Post by nelsona » Mon Mar 25, 2019 12:54 pm

We are getting mixed messages on this -- and inconsistent too. There is a thread from last month on this. Whatever you get from an agent, you MUST get in writing.

And beware: if you convert a 401(K) to an IRA, you are not allowed to pension split that income in canada. 401(K) income is splittable.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Ohw
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Joined: Sun Mar 24, 2019 7:41 pm

Re: IRA management for Canadian residents

Post by Ohw » Mon Mar 25, 2019 1:24 pm

Thanks for the reply.
Not sure I understand “pension split the income into Canada”. What does this mean? Can you please clarify.

My intention is to take monthly distributions from the Ira in the form of an income stream in Canada. This stream will supplement my CAnada pension plan and old age security.

I am a newbie in this and not versed in the accounting details. And really appreciate your help!

nelsona
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Re: IRA management for Canadian residents

Post by nelsona » Mon Mar 25, 2019 1:40 pm

In Canada couples report their income individually. However they allow couples to report certain eligible pension-type income between spouses, if such a split is beneficial, such as if one spouse makes much more income that the other. IRA income is not eligible, while 401(k) income is.
obviously if you have never lived in Canada , you will be on a steep learning curve when it comes to your taxes, but I thought this one nugget would be useful before you ran off and converted a 401(k).
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

marie999
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Re: IRA management for Canadian residents

Post by marie999 » Wed Mar 27, 2019 2:34 pm

I've recently gone through this and for me, I made sure to only have an IRA which is with TD Ameritrade in the US.
They were easy to deal with on this issue as long as I only have an IRA account and they're quite okay for me to trade within it, etc. as a Canadian in Canada.

As Nelson suggests, I called them and got them to send me a TD internal email that specifically stated that I could do this with no problems.

DrJFM
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Location: PEI

Re: IRA management for Canadian residents

Post by DrJFM » Mon Apr 01, 2019 7:04 pm

I also have a TD Ameritrade IRA and can do pretty much everything on line with my Canadian Mailing Address on record -- but you may need to be dual/American citizen for this to be true. It may be impossible to open the TD Ameritrade IRA after you relocate to Canada -- so if you are still there, get an account at TD (or Fidelity as above suggested alternative) before you loose you US address. I also have a TD Bank (US branch of TD) checking account that receives my US distributions from the IRA, free and by wire. This account gives me a US$ Visa Debit card. My US social security retirement goes into my US TD Bank account.

Having tried many ways to move US$ to Canada in $Cnd, the cheapest I have found is to go to my Canadian TD Canada Trust bank, use the Green Machine and pull out $1200 at a time(card has a $1000US daily limit; $20,000 US takes only 20 visits). I do have to go multiple times a month to get stuff moved, but there is NO bank machine fee and the TD to TD conversion seems to go within about one % of the On line rate for the day. Most everything else I tried had a bad bad exchange rate and often wanted a 1 to 3% foreign currency rate. My Canadian Debit card just sent notice of a 2% fee! in the US (ie going the other way) I am expecting the US TD to impose such a charge soon, but until then, I happily pull money out of the Green Machine using US card and stand there and deposit it back into my Canadian TD Canada trust account with that card.

For the occasional bigger move, I have done Norbert's Gambit (google it or search here). TD Bank (US) will also print and mail a US$ check to anyone or any firm you enter into there on-line bill payment system. They will not do an online e-transfer for me with my Canadian mailing address. I pay US$ credit card on line and use my US Visa debit for on-line purchases that are in US$

Everytime they update their on line banking web services pages, they end up with a few pages that only work when you enter your US zipcode, demand you pick a US state for residence or such and I have to waste some time on the phone to accomplish something that was easy a week earlier. You can expect some of this no matter how you try and accomplish your cross border stuff.

Cheers and as always, YMMV

James

coco1106
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Re: IRA management for Canadian residents

Post by coco1106 » Tue Apr 09, 2019 1:56 pm

Ohw

We are in a similar institution as you we are moving back to Ontario Canada after being USA for 27 YRS, we are dual citizens.
We are moving next summer, so I am trying to do as much research as possible.

Everything we have is with Fidelity, when we called them we could not get a answer with regards to being non resident in USA , so we have a meeting set up this summer,
in the meantime I reached out to RBC usa and Charles Schwab who told me that they could maintain IRA, roths for non US residents, so that was reassuring , however , since we have been with Fidelity for 20 plus yrs we would rather stay with them, its sounds like we will be able to maintain our accts with them just from my research and what I have here on here, when we have our meeting I hope they can verify that, in writing !

I have not heard of Fidelity having a relationship with Canada, but if they do then that is great, I do have a friend who moved to UK, she was able to keep all accts with no problem with Fidelity.

My husband has 401k, once he leave his job he will roll it over to a IRA, while we are still residents of USA.
I wish you lots of luck on your move to Canada.

Bumble
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Joined: Tue Apr 23, 2019 1:07 am

Re: IRA management for Canadian residents

Post by Bumble » Tue Apr 23, 2019 2:22 am

Even if you have something in writing from Fidelity, it doesn't mean they can't change their policy down the road.

I understand you'd like to put everything in Fidelity. I would argue it may not be a bad idea to segregate your retirement assets across two or more places to hedge your bets. I'm in a similar boat as you - dual citizen planning to return to Canada this summer. My plan is to transfer my retirement savings from Vanguard and Merrill Edge to at least two brokerages (likely, Fidelity and TD Ameritrade) that appear to be Canadian-resident-friendly. This way, even if one of the two brokerages changes their policy down the road, I probably can still transfer my assets to the other one.

For non-retirement assets, I'm thinking of opening an account with Interactive Brokers, which I understand to have very favourable Forex spread and commission if you have a six-digit dollar balance, on top of catering to both U.S. and Canadian residents. I still need to do a bit more research into this.

I'd love to hear any further developments in the next few months before my move.

nelsona
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Re: IRA management for Canadian residents

Post by nelsona » Tue Apr 23, 2019 11:27 am

I agree with Bumble's suggestion to have at least two brokerages on board, given the apparent proclivity for these firms to changes the minds (not forced to due to changes to laws or regs).
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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