Hi. Very helpful and informative board. I've looked through previous posts and couldn't find an answer to my question. So here it is.
I'm Canadian and have lived in Britain for 10 years. I'm returning to a job in Montreal in several months, employed by an American company. I will actually be their first Canadian employee, and they have offered me their US 401k scheme, presumably with some matching funds.
Apart from the issue of repatriating my UK pension to Canada, the question is: should I accept the 401k scheme and if so, what tax liability might I assume in the US and how would the Canadian (and Quebec) tax authorities view this?
Or alternatively, should I ask for a Canadian equivalent scheme which is equally advantageous? Any suggestions?
thanks
Cdn resident with 401k from US employer
Moderator: Mark T Serbinski CA CPA
You should INSIST on a Cdn solution to the 401(k), as this is an unneccary headache for you to be saddled with, considering you have no attachemnt to US.
Canada does not recognize your 401(k) contributions as a tax deduction, so you will have to add it to your income. You should request that they aloow you to use your RRSP contributions and match these similarly to how they would match 401(k).
Their including you in the 401(k) would seem to indicate that they are merely going to treat you as a US employee who happens to be working in Canada. This doesn't work. They should be setting up a Cdn payroll for you, following Cdn withholding and benefit guidelines.
<i>nelsona non grata... and non pro</i>
Canada does not recognize your 401(k) contributions as a tax deduction, so you will have to add it to your income. You should request that they aloow you to use your RRSP contributions and match these similarly to how they would match 401(k).
Their including you in the 401(k) would seem to indicate that they are merely going to treat you as a US employee who happens to be working in Canada. This doesn't work. They should be setting up a Cdn payroll for you, following Cdn withholding and benefit guidelines.
<i>nelsona non grata... and non pro</i>