Trading in my RRSP while in the US

[DerekW]

Hello,

I am a Canadian citizen, and I recently started my PhD in North Carolina. I plan to cut residential ties with Canada after this tax year, but will remain a Canadian citizen of course.

I have a Canadian RRSP through Questrade that I did not empty. I understand that while living in the USA it is a bad idea to contribute to or withdraw from the RRSP, because this will trigger some nasty taxes.

I wonder, however, whether I am allowed to actively buy and sell stocks and ETFs within my RRSP while in the US. Will this trigger anything, or is that safe to do w/out tax consequences while living outside of Canada.

Thank you very much for any help. I've found it tricky to get an answer to this question!

Derek

[nelsona]

You MUST declare your residence to Questrade. They will then inform you if you can actively manage your portfolio or not. They may tell you to find another CDn brokerage to handle your RRSP.

But, generally, activity within your RRSP is a non-event tax-wise, just as it is in canada. When you remove funds from your RRSP, then you will pay Cdn and perhaps some US tax.

[pl0910001]

I am in a similar situation . A few tips if I may.
1. Questrade will have no issues with you being a non resident and holding an RRSP. I believe, but am not certain that you won't be allowed to make any buys in the account. Sells and liquidation are fine.
2. The simplest workaround for me was to buy either a ishares or vanguard all in one etf (XBAL, VGRO, etc). These rebalance themselves, and if you sign up for the DRIP, the dividedends are repurchased inside the RRSP (non taxable event).
3. Make sure that Questrade doesn't withold any non-resident taxes. The have not in my wife's RRSP, but for mine, can't seem to get it sorted out and set mine to not withold. They have told me it's been recitifed and yet, it still happens, leading to having to chase after them to get the tax refunded.
Otherwise, it's an easy way to have that money managed but with no issues.

[nelsona]

Just to note that allowing you to "hold or sell" is not really a satisfactory solution for most investors. Move to a brokerage that will allow full managing of one's funds. There are quite a few.

[DerekW]

Thanks for the help so far.

So PL09 you are saying that buying within the RRSP IS considered a 'taxable event,' or you're not sure?

Nelsona, I had thought when you said "activity within the RRSP" being non-taxable that you were referring to all activity, including buying. But were you only referring to selling and holding?

I suppose I should also ask Questrade these questions and I will try to do so today.

Thanks,
Derek

[Cdninga]

I have held onto my RRSP since moving to the US in 1984. I have had it with both BMO and Scotia over this period and have never had any restrictions on buying, selling, etc. I can't speak to other brokerages but you shouldn't have a problem finding one who can manage your portfolio without any issues. As nelsona mentioned, there is no taxable event in the US until you start taking distributions. Just make sure that you fill out the FBAR form each year with your RRSP account information.

[pl0910001]

Buying within an RRSP is not a taxable event. However, as you are a US resident, the brokerage would be required to hold a US based brokerage license i believe. This is something that not all brokers have. So the issue isn't taxes, but is the fact that your account may be frozen out from any buys due to this requirement. Whether they actually freeze your account in this manner or not, who knows? Buy Nelsona is correct. If you want to be able to buy and sell at will, then likely a broker with no such restrictions is for you.

[nelsona]

As long as you TELL your RRSP fund management that you are living in a particular US state, and the firm allows full trading, you are good. many people fake a CDn address (not allowed) to fool the banks, because most have at some time in the past, including BMO disallowed trading.

[Kader99]

I am in a similar situation , dual citizen with RRSP account.
I have 17K invested in GIC / RRSP with 1% interest ! and would like to move it to a mutual fund that has a descent return.
I would appreciate if you can provide few banks/ brokerage that hold a US based brokerage license to allow me to buy a mutual fund within my RRSP.

Kader

[nelsona]

Only Cdn firms can manage your RRSP, and you MUST tell your Cdn manager that you have left Canada for US. There are several CDn firms that will deal with you. Simple banks cannot; their brokerage arms usually can.

[Kader99]

Thanks nelsona!
Appreciate your valuable feedback.

Kader

[ZippyUSA]

Kader
I've traded my RRSP and LRRSP while living in the US for 20 years now thru TD Waterhouse. It is a pain since you have to call and make the trades over phone as opposed to using the online trading feature. Commission is similar to trading on line as opposed to the costs to trade through a telephone call to broker.