Inherited Roth IRA

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crossbordernut
Posts: 17
Joined: Fri Jan 08, 2016 12:45 pm

Inherited Roth IRA

Post by crossbordernut »

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
Location: Nowhere, man

Re: Inherited Roth IRA

Post by nelsona »

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. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
steveh2
Posts: 5
Joined: Wed Mar 13, 2024 4:18 pm

Re: Inherited Roth IRA

Post by steveh2 »

crossbordernut wrote:
> 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.


Hi Crossbordernut, Just wondering if you have tried this yet (filing the election) and whether the CRA accepted it or not?

Thanks
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