Hi Nelsona.....looks like you are the all knowing individual on this site so I'd really appreciate assistance.....thanks.
I'm a CA citizen who is moving to the US (Ohio) on K1 (fiance visa) and would like to get some advice on what I should do with my assets prior to moving.
I have the following assets:
1. RRSP (@ Investors Group)
2. Brokerage account with mutual funds (@ Investors Group)
3. Checking account (@ PC Financial)
RRSP:
I plan on leaving my RRSP intact in CA and filing 8891 each year to defer US taxes on internal income. My question is will I be limited in assessing the account for buying, selling, etc.? My advisor at Investors Group told me that they wouldn't be able to service my account since I'm won't be living in CA. I understand that I should consider moving the account over to TD Waterhouse to have access, is that correct? Also, I'm thinking of making a large contribution (prior to leaving CA in 2 weeks) to deduct on this year's CA tax return.....is that advisable? Basically, this large contribution would be the amount I would have been contributing until the end of the year if I was staying in CA. I don’t believe I can continue to make contributions to the RRSP while living in US, is that correct? Any other suggestions or things I should be aware of?
Brokerage account (non-registered):
I have sold all the mutual funds to convert everything to cash. I transferred the cash into my checking account at PC Financial. I plan on opening an account with TD Waterhouse and then will open & move the money to a US brokerage account to invest…likely TD Ameritrade, which is my fiance’s brokerage firm in Ohio. Will I have any problems transferring that money after I leave or should I do it prior to leaving? Any other suggestions or things I should be aware of?
Checking account:
PC Financial said that they cannot service my account because I will not be living in CA. So I plan on opening and transferring the money to a TD Waterhouse account and then eventually to a US bank account. Do I need to do anything before I leave CA? Should I leave the CA account open? TD Waterhouse offers accounts in both CA and US dollars…are one or both preferable? I guess CIBC is another option…is TD Waterhouse a better choice than CIBC? Any other suggestions or things I should be aware of?
Other questions:
Do I need to have my CA accounts changed to non-resident status?
I believe I will need to file a departure return with CRA, correct?
Is a departure return different than a normal annual CA return?
Does a departure return need to be filed in-addition to my annual CA return?
When does a departure return need to be filed?
Thank you very much in advance for your help,
J&D
General asset questions from CA citizen moving to US
Moderator: Mark T Serbinski CA CPA
RRSP:
Nothing wrong with your plans...
You will need to move your RRSP to a broker who can deal with you, such as TD waterhouse. Do not let your loyalty to IG get in the way of this. You need to be able to trade your account from time to time; you cannot afford to have your hands tied. Moving them to another broker, will result in new book values for your RRSP holdings, which is also advisable.
The contribution made before (or after, doesn't really matter) moving is a good idea. TDW may not allow you to do it after, so get this done now.
Brokerage acct:
Nothing wrong with your plans.
Chequing acct:
Open up a low/no fee bank account at another Cdn bank. I've had a BMO account which they have no problem with me being in US, and a TD credit card. PC is just being difficult, so move elsewhere. It is a very good idea to keep a Cdn bank and credit card for use while in Canada or dealing witha Cdns (for ease of transfers, exchange, etc). A bank and credit card are not an issue for tax residency if that is your concern.
I have never heard of a bank refusing to allow a current holder to keep the account after moving to US. Yes, you shoudl inform anyone that might pay you money (bank, RRSP, etc) that you are non-resident -- after you move. Just be sure, like you did with IG and PC, of their current policy on non-residents. Credit card won't care -- they don't pay you.
Departure return:
It is the normal return for your province BUT with a departure date, and a couple of other schedules to fill. It is due at normal time for that years' return. See the emigrants guide from CRA. No need to advise CRA that you have become non-resident unless you are getting GST or CCTB payments, which must stop when you leave.
Of course, if you move after Jan 01, then your departure return would be for the 2010 tax year, and would not be due for quite awhile.
Nothing wrong with your plans...
You will need to move your RRSP to a broker who can deal with you, such as TD waterhouse. Do not let your loyalty to IG get in the way of this. You need to be able to trade your account from time to time; you cannot afford to have your hands tied. Moving them to another broker, will result in new book values for your RRSP holdings, which is also advisable.
The contribution made before (or after, doesn't really matter) moving is a good idea. TDW may not allow you to do it after, so get this done now.
Brokerage acct:
Nothing wrong with your plans.
Chequing acct:
Open up a low/no fee bank account at another Cdn bank. I've had a BMO account which they have no problem with me being in US, and a TD credit card. PC is just being difficult, so move elsewhere. It is a very good idea to keep a Cdn bank and credit card for use while in Canada or dealing witha Cdns (for ease of transfers, exchange, etc). A bank and credit card are not an issue for tax residency if that is your concern.
I have never heard of a bank refusing to allow a current holder to keep the account after moving to US. Yes, you shoudl inform anyone that might pay you money (bank, RRSP, etc) that you are non-resident -- after you move. Just be sure, like you did with IG and PC, of their current policy on non-residents. Credit card won't care -- they don't pay you.
Departure return:
It is the normal return for your province BUT with a departure date, and a couple of other schedules to fill. It is due at normal time for that years' return. See the emigrants guide from CRA. No need to advise CRA that you have become non-resident unless you are getting GST or CCTB payments, which must stop when you leave.
Of course, if you move after Jan 01, then your departure return would be for the 2010 tax year, and would not be due for quite awhile.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Thanks Nelsona for all the help.
One question: For the RRSP, what do you mean by "Moving them to another broker, will result in new book values for your RRSP holdings, which is also advisable."
Also, I'm thinking of moving the RRSP to TD Canada Trust rather than TD Waterhouse since there are no admin fees at TD Trust. Any comments on this idea? Does that affect getting the new book values?
Thanks again.
One question: For the RRSP, what do you mean by "Moving them to another broker, will result in new book values for your RRSP holdings, which is also advisable."
Also, I'm thinking of moving the RRSP to TD Canada Trust rather than TD Waterhouse since there are no admin fees at TD Trust. Any comments on this idea? Does that affect getting the new book values?
Thanks again.
In order to reduce the future US tax on the post-arrival growth of your RRSP, you need to make sure that the book value (the avergae cost basis) of your assets is at a maximum. If your funds have increased, the current book value is less than the current market value, and you would face more US tax down the road. Crystalllizing this growth would mitigate this.
The simplest way of doing this is by moving your funds around, switching within the fund famly for example.
My comment merely meant that when you switch brokers, and likely buy a new set of funds, you will accomplish both things you need to do at the same time.
TD canada trust is NOT able to help you here. Only TD waterhouse, since they are a broker, rather than a fund dealer, and TDW licensed to deal with you while in US, while TD canada trust is not.
The admin fee (likely because your RRSP is small) will be the price you pay.
The simplest way of doing this is by moving your funds around, switching within the fund famly for example.
My comment merely meant that when you switch brokers, and likely buy a new set of funds, you will accomplish both things you need to do at the same time.
TD canada trust is NOT able to help you here. Only TD waterhouse, since they are a broker, rather than a fund dealer, and TDW licensed to deal with you while in US, while TD canada trust is not.
The admin fee (likely because your RRSP is small) will be the price you pay.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
[quote="nelsona"]In order to reduce the future US tax on the post-arrival growth of your RRSP, you need to make sure that the book value (the avergae cost basis) of your assets is at a maximum. If your funds have increased, the current book value is less than the current market value, and you would face more US tax down the road. Crystalllizing this growth would mitigate this.[/quote]
Do you only get taxed on the growth if you reside in US? (ie. retire in the US)
For example, if you move the US, work for several years, and then return to Canada, you won't get taxed in the US on the RSP, correct? In this case, getting new book values wouldn't make a difference, right?
Do you only get taxed on the growth if you reside in US? (ie. retire in the US)
For example, if you move the US, work for several years, and then return to Canada, you won't get taxed in the US on the RSP, correct? In this case, getting new book values wouldn't make a difference, right?
That is correct, as long as you have deferred taxation using Form 8891. If you have absolutely no intention of ever withdrawing your RRSP while in US, that there is no need to bump up value. But make sure you make the yearly deferral. You will not owe tax on the deferred income if u=you cease to be a US resident.
However, things change, so why not do this move which makes no harm to your account?
However, things change, so why not do this move which makes no harm to your account?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing