Hello
I'm a new graduate moving to the US to work with a TN status. Since I just graduated, I'm not sure if my move to the US will be permanent or not.
So my question is, what are my options as far as saving for retirement is concerned. My company offers the 401(k) plan with some matching, which I understand is similar to RRSP up here in Canada. From my limited researching, if I withdraw the money from the 401(k) plan before 59.5 years of age, I will be penalized up to a certain percent and still be taxed like normal income. I'm thinking of investing up to the maximum that my company is willing to match me for and invest the rest somewhere else. Since I don't have income in Canada, am I correct in thinking that I won't be able to invest in RRSP?
All opinions are appreciated.
And at the moment, I'm totally clueless about taxes, as my father have been taking care of that so far (I'm 23 years old and have worked in Canada).
thanks in advance
new grad moving to US to work
Moderator: Mark T Serbinski CA CPA
If you are moving to US, even if your not sure as to how long, you will be taxed on your world income income only in the US. So, you should be using US methods to reduce your US tax, of which 401(k) is uppermost.
Outside of 401(k) a home would be best investment, followed by long-term stock/mutual investments.
Resist the teptation to put money in Roths, as these are not accepted by Canada yet, and will give you fits should you ever return to Canada.
Forget RRSP until you actually live in Canada. Your 401(k) can sit in US even if you leave, so don't worry about that.
The big diffs between RRSp and US plans is that: US plans don't have carryforward on contribution limits (you must fund them year-by-year), and 401(k) can only be funded by payroll deduction.
Outside of 401(k) a home would be best investment, followed by long-term stock/mutual investments.
Resist the teptation to put money in Roths, as these are not accepted by Canada yet, and will give you fits should you ever return to Canada.
Forget RRSP until you actually live in Canada. Your 401(k) can sit in US even if you leave, so don't worry about that.
The big diffs between RRSp and US plans is that: US plans don't have carryforward on contribution limits (you must fund them year-by-year), and 401(k) can only be funded by payroll deduction.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
thanks for the quick reply
and one more thing, the whole taxes thing is confusing me.
if I work in the states, do I need to do my taxes in Canada? From my understand, I would list it down as foreign income and use it for foreign credit?
not too familiar with taxes.
Is there any tax services (paid/free) that I can get help from if i need extra help?
and one more thing, the whole taxes thing is confusing me.
if I work in the states, do I need to do my taxes in Canada? From my understand, I would list it down as foreign income and use it for foreign credit?
not too familiar with taxes.
Is there any tax services (paid/free) that I can get help from if i need extra help?
In your first tax year, you will likely have income from both Canada and the States, and you will have to file in both countries. There is a tax treaty between the two countries, and it really is quite complicated for a newbie. I would recommend that you negotiate with your US employer that they cover the expenses of filing tax returns during the first year. Then get professional help - one firm to do both sets of taxes together, such as the host of this forum.