My wife and were US green card holders, but returned to Canada a few years ago. We gave up our green cards when we left. My wife maintained employment with her US employer when she moved back to Canada (Canadian division of the company, so she receives her income on a T4), so we weren't able to transfer her 401k (traditional and Roth) to an IRA before we left. She's getting closer to retirement now, so she'll have an opportunity to do something with those 401k accounts. She does have a traditional and Roth IRA already at another financial institution in the US, so I'd like to explore the possibility of rolling over her 401k accounts into her existing IRA accounts, to prepare for the possibility that her employer may want her to close the 401k accounts when she leaves their firm.
I notice in the Canada Roth election rules that a rollover from a Roth 401k to a Roth IRA isn't considered a Canadian contribution. Is there anything that needs to be done to update the Roth election if this were to be done? She had to file two letters for her Roth election, one for the Roth 401k and one for the Roth IRA.
Are there any special tax considerations for traditional 401k rollovers? Are there any IRS forms that need to be completed? Does anything need to be done on her Canadian return?
Thank you in advance.
401k rollover as a Cdn resident, US expat
Moderator: Mark T Serbinski CA CPA
Re: 401k rollover as a Cdn resident, US expat
As you say, moving a Roth type account to another is not a problem. there is no requirement or provision to update the original Roth election that was made on the Roth401(K).
Nor is moving 401(K) to an IRA a problem, but just in case you wish to do some pension-splitting in the future, Canada does NOT allow pension-splitting for an IRA, but does for a 401(k).
Nor is moving 401(K) to an IRA a problem, but just in case you wish to do some pension-splitting in the future, Canada does NOT allow pension-splitting for an IRA, but does for a 401(k).
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Re: 401k rollover as a Cdn resident, US expat
That's good to hear. Thank you for the additional information about pension splitting with 401k accounts, we were not aware of that and it will help us with our planning. I think we'll probably try to keep these accounts in place, but if we're forced to close them it's good to know we have another option.