US citizen looking for advice on how to get assets out of Canada

[garya505]

We're US citizens living in the US.

I'm trying to help my sister with a question about moving Canadian assets to a US custodian. My sister owns an account that she inherited from her husband when he passed away. I don't know the exact kind of account. I'm trying to get more details. She's not computer-savvy so I'm helping out.

Her husband worked for Wisconsin Central Ltd. railroad in the US. This railroad got bought by Canadian National railroad in 2001. I think the account is some sort of CN retirement account, as it holds only CN stock. The statement my sister showed me is from Computershare (Toronto), who I believe is the custodian. My sister gets dividend checks from this stock.

Is it possible to do an in-kind transfer to a US custodian? If not, what are the Canadian tax consequences if she cashes this out? Can she cash this out slowly to reduce taxes? What kind of financial professional would she use to assist with this?

Any help would be appreciated.

[nelsona]

What do you mean exactly by become a "custodian"? HER custodian, or the accounts custodian.

[garya505]

nelsona wrote:
> What do you mean exactly by become a "custodian"? HER custodian,
> or the accounts custodian.

Account custodian, like Vanguard, Fidelity, etc. in this case Computershares Toronto has it.

[nelsona]

Why would she need to transfer it? That would be SELLING it to you, or COLLAPSING the accounts.

[garya505]

nelsona wrote:
> Why would she need to transfer it? That would be SELLING it to you, or
> COLLAPSING the accounts.

No, she is not selling it to me. She wants to get it out of Canada, either by an in-kind transfer to Computershares US or by simply withdrawing it.

She doesn't need the cash now, but she wants to get this done while she's alive so her heirs won't have to deal with it.

[nelsona]

Oh, ok, by custodian you meant a brokerage or fund manager.

No, she cannot open a US account as a CDN resident. This violates CDN securities regulations. What is her concern about leaving them where they are?

She would need to sell the investments, and if then if she wants to give them to you now or later....

[nelsona]

So, now that you have finally stated that she is US resident (never mentioned), we can make some progress here....

If the account is a simple investment account (not a pension), she can transfer the funds to any US brokerage. The US brokerage would initiate the transfer (she would need to ask if the shares held in this account are transferable). This would not be a taxable act anywhere. The fact that she gets dividends from the account suggest that it may be that simple. The CNR shares which trade in canada would be "journaled" to the US version (CNI).

If the account is a "registered" account, like a pension, then this would require selling the investment, paying Cdn tax at the US resident rate (25%). She would also report the income on her US return (credit would be given for the CDn tax). Then she could do what she wanted with those funds,

So, first thing she needs to do is to talk to compushare and find out what kind of account it is. They are managing either a employee stock plan or a retirement plan. They would know. And would know what kind of "dividend" she is recieving.