Any thoughts on structuring company match 401K in a Roth or Traditional IRA, and whether one would be more beneficial in terms of how the CRA would treat them on initial investment & Upon Withdrawl.
I was hoping to see some favorable tax rule changes in the recently approved federal budget surronding the tax treatment of 401K's in Canada, but was bitterly disappointed.
I am a married Canadian Resident commuting to the US under a TN Visa.
Thanks in advance for help
WIU
Roth IRA vs Traditional IRA & Canadian Taxes
Moderator: Mark T Serbinski CA CPA
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workingintheus
- Posts: 14
- Joined: Wed Apr 11, 2007 3:19 pm
In your situation a deductible 401(k) contribution is useless, as you well know since you are taxed going in by canada, and taxed coming out by US (and to a lesser extent by Canada).
The Roth 401(K), which is actually a combination of Roth and regular 401(k), ids the worst of both worlds, since you get no tax deferral for the Roth. The regular 401(k) portion is fully taxable upon withdrawal by both Canada and US, but at least you will not have paid tax going in.
The rules on pensions will require a treaty change, and those are pretty slow in coming. That was the only thing that was in the budgt -- a promise of near future treaty change.
The Roth 401(K), which is actually a combination of Roth and regular 401(k), ids the worst of both worlds, since you get no tax deferral for the Roth. The regular 401(k) portion is fully taxable upon withdrawal by both Canada and US, but at least you will not have paid tax going in.
The rules on pensions will require a treaty change, and those are pretty slow in coming. That was the only thing that was in the budgt -- a promise of near future treaty change.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 