Inherited Roth IRA

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crossbordernut
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Joined: Fri Jan 08, 2016 12:45 pm

Inherited Roth IRA

Post by crossbordernut » Wed Jun 03, 2020 2:45 pm

Hi, we know all about the one-time CRA election that lets a new Canadian immigrant Roth IRA holder prevent future taxation on the Roth under Treaty XVIII 3(b) and (7). My question is, in the case of a Canadian resident dual citizen inheriting a Roth IRA from his deceased US resident mother, we know the inheritance itself will be tax-free under XVIII(1), but can future growth post-inheritance also be tax-sheltered if the son makes the CRA election? (Let's assume the son collapses it over 10 years as per the SECURE Act and that the Roth was in existence for at least 5 years). The election is obviously intended only for immigrants, but it could be argued that the inheritance scenario also qualifies because it involves a Canadian resident newly owning a Roth IRA making the election in the first year of ownership. Another point in favour of this argument is that the election states that a rollover from another Roth IRA (as the inheritance is from mother's Roth to son's inherited Roth) won't be considered a contaminating Canadian contribution. Thanks for your thoughts.

nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Re: Inherited Roth IRA

Post by nelsona » Thu Jun 04, 2020 7:08 am

I would file the election in the year that the Roth was inherited. Certainly none of it ia taxable now. And you are not making any disqualifying "Canadian contribution", so you should be fine.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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