At Retirement - how to account for 401k income with CRA

[GRioux]

I’m still about 10 years from retirement. I worked in the US beteeen 2014 and 2016. I have a 401k from that job.

When I was in the US, I paid taxes in Canada (significant residential ties). As you know, CRA doesn’t let you write off your 401k contribution (like they do for your RRSP deduction) therefore, I already paid Canadian taxes on the 401k capital itself (but not the capital gain, of course).

My question is how do I differentiate that when I start drawing income from the 401k so i only pay taxes on the capital gain portion of the income drawn?

As always, thank you so much !

[Ohw]

I contacted RBC wealth management in the US and was assured that while in Canada I can have my IRA managed by a financial adviser who can trade on my behalf to balance the portfolio as necessary. This service was not available from TD Ameritrade. Of course it was also not available from any of the others, such Vanguatd, Fidelity, etc. TD’s only option for non residents is a self managed account, which I am not prepared, nor qualified, to manage since I am already retired and need to protect my savings. I am disappointed that there was no other option except RBC, they do charge a hefty 1% for this service. But it seems like I have no other choice.

[nelsona]

So, getting back to your question, you need to track the contribution YOU made while resident of Canada, that were not allowed to be deductible. Realize that now they are, and you should be deducting them, so you can no longer be claiming this. This was a few years ago, so you need to have kept your records.

Once you begin taking funds, simply report the taxable portion along with a note to CRA.

[nelsona]

Rereading your post, I would say that since this occurred recently, you do not do your taxes correctly, so you need to fix those years now. I though you were referring to years before 2010.

Since they are deductible, there is nothing to do, simply report the entire withdrawals as taxable.

[GRioux]

I made 401k contributions in 2014, 2015 and 2016 matching those my employer made.

For my canadian taxes, I was told to count my employer’s contribution as income and that I was not allowed to deduct my own contributionn to reduce my canadian taxable income (as one would do an RRSP).

Was that inaccurate?

[nelsona]

No it was not. there is a form for reporting 401(k) and getting deduction (assuming you did not double dip and also do RRSP) Search CRA website

[GRioux]

Many thanks!