What happens to our RRSPs if we move back to the US?

eortlund · Post by **eortlund** » Mon Dec 29, 2008 10:12 pm

OK, as I said, I need to focus on retirement planning. My husband has an RRSP and hopefully I'll get a spousal RRSP soon (when I am eligible for an SIN). I'm really hoping to step up our contributions. Because we were not eligible for the Child Tax Benefit and UCC for 18 months after our arrival, our budget does not depend on that money, and my thinking is that we will redirect it all into the RRSPs.

Now, if we return to the US in 5 years, 10 years, 20 years, what are the options for the RRSP? Can we just leave it growing in Canada and then draw from it at retirement (I know it has to be converted to an RRIF). Our Roth IRAs are sitting in the US in that way. Or will we be forced to collapse the RRSP when we leave and take a tax hit.

We are behind in our retirement planning and I want to do the right thing to maximize growth and minimize tax.

nelsona · Post by **nelsona** » Tue Dec 30, 2008 5:11 am

Your RRSPs will continue to be sheltered when you move to US. Given your US citizenship, you need to make sure your RRSP is sheltered regardless of whwere you live, by filing Form 8891.

eortlund · Post by **eortlund** » Tue Dec 30, 2008 9:39 am

Thanks! That's reassuring. We have been filing form 8891.

nelsona · Post by **nelsona** » Tue Dec 30, 2008 10:23 am

no problem.

based on what you have said,m you should probabaly be focussing on your RRSP and paying down your home.

A TFSA might seem attractive (and is being hyped to the max right now), but the growth is taxable in US, so be careful. RRSP and house first.

nelsona · Post by **nelsona** » Tue Dec 30, 2008 10:23 am

... and any other debt of course!

hodini · Post by **hodini** » Thu Jan 15, 2009 11:41 am

nelsona,

when you say "be careful" because the TFSA's growth is taxable in US. Taxable on a year-to-year U.S. filing basis? Taxable only upon withdrawl? Doesn't seem attractive at all for a U.S. citizen living in Canada!

nelsona · Post by **nelsona** » Thu Jan 15, 2009 12:49 pm

Taxable year-by-year, just like RESP.

hodini · Post by **hodini** » Thu Jan 15, 2009 1:33 pm

then under this scenario there would be absolutely no advantage at all in a TFSA, Agree?

"just like an RESP." That's interesting. I was trying to get into an RESP, but because of my current temporary immigration status--my kids couldn't get SIN's and therefore I am unable to contribute for the time being.

RSSP gains are not taxed in the U.S. year-to-year when a U.S. citizen is residing in Canada. Only on withdrawl? Right?

This forum is terrific and your firm does a great job. I am a client.

nelsona · Post by **nelsona** » Thu Jan 15, 2009 1:47 pm

I don't work for serbinski, and his contributions to this site are minimal at best.

RRSps are only taxed on withdrawal IF you elect by form 8891 to do so. Only the growth is taxed.

AS a temp resident it is pointless to get RESP or TFSA.

hodini · Post by **hodini** » Thu Jan 15, 2009 2:31 pm

Why do you say "IF you elect"? Is is not required for a US citizen to report withdrawls from an RRSP if residing in Canada?

Is there an equivalent of an 8891 in Canada. A requirement to report holdings and interest on tax sheletered US instruments, i.e. IRA's, 401(k)'s, etc. ??

nelsona · Post by **nelsona** » Thu Jan 15, 2009 4:12 pm

If you do NOT elect to defer taxation, you pay yearly.
If you DO elect, you then defer taxation until you take withdrawals.

Canada does not require any extra paperwork. Your yearly income is not taxable. You only incude withdrawal as income.

hodini · Post by **hodini** » Thu Jan 15, 2009 4:31 pm

Got it. This board is excellent and appreciated. I understand you are not employed by Serbinski--I assume you run this board and you are an independent contractor who is also a Certified Public Accountant (US) and/or a Chartered Accountant (CN) ?

nelsona · Post by **nelsona** » Thu Jan 15, 2009 4:48 pm

you see my signature.... NON PRO

hodini · Post by **hodini** » Thu Jan 15, 2009 5:52 pm

didn't notice the signature tag. you're very knowledgeable. you answer all of the questions on these forums?

nelsona · Post by **nelsona** » Thu Jan 15, 2009 8:43 pm

only the good ones