RRSP/LIRA withdrawal by non resident

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jcyr
Posts: 17
Joined: Mon Nov 07, 2016 9:12 pm

RRSP/LIRA withdrawal by non resident

Post by jcyr »

Time has finally come to withdraw Canadian retirement funds as a non-resident living in the US. Is this information given in 2014 still accurate?

"I'll put aside the issue of "waiting" to take SS/CPP/OAS for now.

For OAS you will get XX/40ths of the monthly payment, where XX is the years you lived in Canada after age 18. This will be paid to you in USD, and taxed only in US (at 85% inclusion rate, like SS). OAS cannot be clawed back regardless of your income.

For CPP, you will get the full value you are entitled to, based on what you put in. It will of course be less than if you had worked all your time in Canada. Sent to US in USD, taxed only in US like OAS.

For SS, again, you will get a benefit based on what you paid in (assuming you worked 10 years), HOWEVER, it will be reduced by a formula called WEP, once you are collecting CPP (OAS has no effect).
Studies I've done indicate that for one living in US, it is best to take CPP as early as possible, before taking SS. That is another story.

As to your RRSP and RRIF, have you never informed them, the day you left for US, that you became a US resident? This is not something to divulge when you want to take money out, but well before this.

Taking money from LIRA before you are normally allowed to can be done by a non-resident, and, yes, it does take a letter from CRA indicating that you are non-resident, which is done by filing an NR73 with CRA. CRA telephlunkies are not the best resource.

RRSPs (or the RRIF you convert it to) and LIRA payments will be taxable 25% in Canada (15% for RRIF payments).

US taxes all LIRA withdrawals as income, It only taxes RRSP/RRIFs partially, based on the value the RRSP had when you moved to US.You would need to know its value when you moved. The Cdn tax that is withheld from your LIRA/RRSP, etc, is used as a credit on your US tax return."
nelsona
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Re: RRSP/LIRA withdrawal by non resident

Post by nelsona »

Absolutely.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
jcyr
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Joined: Mon Nov 07, 2016 9:12 pm

Re: RRSP/LIRA withdrawal by non resident

Post by jcyr »

As I understand it, taxes withheld and paid to Canada, are applicable as tax credits against payable US income tax. Can unused credits carry forward into future years?
nelsona
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Re: RRSP/LIRA withdrawal by non resident

Post by nelsona »

Yes, but I would not count on being able to use them.
Thare are very few Cdn sources of income (general limitation income) that are taxed less by Canada than US, so these overages will simply be carried forward until they expire in 10 years.
Focus on reducing the Cdn tax, by using RRIF.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
jcyr
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Re: RRSP/LIRA withdrawal by non resident

Post by jcyr »

Both the National Bank and the Royal Bank tell me that RRSP to RRIF conversions are not allowed for non-residents who don't already have an RRIF account. A senior officer at CRA confirmed.
nelsona
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Re: RRSP/LIRA withdrawal by non resident

Post by nelsona »

This is not correct, and there is no regulation against this. The CRA has no control over the brokerages in this matter.
There are dozens of us on this forum that have done this, even very recently.

Think of this: You are 71 yrs old and must convert. You think there is actully a rule that forbids thso for non-residents?!

Speak to a higher up at your brokerage. And forget what senior telephlunkie told you. Or have him point to the CRA regulation that forbids this. That should be fun. The horns in Ottawa have addled his brain .
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
jcyr
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Joined: Mon Nov 07, 2016 9:12 pm

Re: RRSP/LIRA withdrawal by non resident

Post by jcyr »

Ok, fine. The banks wont do it. What are these 'brokerages' you speak of?
jcyr
Posts: 17
Joined: Mon Nov 07, 2016 9:12 pm

Re: RRSP/LIRA withdrawal by non resident

Post by jcyr »

Consider this. Of my untaxed retirement savings roughly 20% is in Canada. Suppose I cash 100% of Canadian RRSPs today and subject to the 25% withholding for Canada. Sure, the tax credit will be more than the extra US taxes, but I'd have 10 years to liquidate those credits against taxes incurred against US retirement savings withdrawals. What am I missing?
nelsona
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Re: RRSP/LIRA withdrawal by non resident

Post by nelsona »

Incorrect. Foreign taxes can only be used against foreign income. US doesn't give taxes paid to foreign govts on US-sourced income. If taking out the entire account, I would suggest simply taking the 25% tax as a deduction. A deduction can be taken on any foreign tax (it does not have to be prorated to foreign income, but it can only be used in the year it is pad, no carryforward.

Can I ask if your 'bank' knew that you were in US all along, or did they merely find out now, when you wanted to convert? Most bank RRSPs are not allowed to deal with US residents from day 1. Only their brokerage arms are.

In any event, TD Direct is one that has always dealt with US residents over the years.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
jcyr
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Re: RRSP/LIRA withdrawal by non resident

Post by jcyr »

Of course the bank(s) knew. They've been sending me quarterly reports for the last 20 years.

I'll give TD Direct a call.

A colleague suggested I forget about the funds entirely like he did... not worth the grief extracting it.
nelsona
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Re: RRSP/LIRA withdrawal by non resident

Post by nelsona »

That would be silly. And at 71 you would still owe taxes,
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Cdninga
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Re: RRSP/LIRA withdrawal by non resident

Post by Cdninga »

I am a US citizen and resident and converted my RRSP to a RRIF three years ago. I held my account with Scotia Mcleod and had no issues with them doing the conversion.
nelsona
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Re: RRSP/LIRA withdrawal by non resident

Post by nelsona »

Exactly. One has to deal with the brokerage arm of the banks, not the banks themselves.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
ajtobin
Posts: 4
Joined: Mon Feb 27, 2023 2:11 pm

Re: RRSP/LIRA withdrawal by non resident

Post by ajtobin »

Hi @Cdninga.. saw your post, and am hoping to find out how you get your RRIF distribution sent to your US bank. I also am a US citizen and non-resident of Canada. I also use ScotiaMcLeod (they hold my RRSP and LIRA). First step is they are setting up an RRIF, and then I'll set up a schedule of periodic distributions. I asked them if they can send the distribution to my US bank account. They told me they can only give a distribution to a Canadian bank, and then I can wire transfer it from there. Just wondering if you have a simpler, more cost efficient way of getting your money from your RRIF to your US bank account?
Cdninga
Posts: 13
Joined: Thu Jun 25, 2020 6:34 pm

Re: RRSP/LIRA withdrawal by non resident

Post by Cdninga »

In my case, Scotia does a wire transfer once a year from my RRIF account to my US bank account. 2023 will be the fourth year that they've done the transfer. First, they do a conversion from CAD to USD and then they wire transfer the USD to my bank.
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