Opening a ROTH IRA after returning to Canada to consolidate accounts

[Will123]

I have returned to Canada after living in the US for many years and contributing to 401ks and IRAs. I have made the elections for the ROTH IRAs and not made any Canadian contributions.

I would like to consolidate the accounts (currently with Schwab and Fidelity) at BMO, where they can be managed more easily. the BMO Nesbitt Burns guys say this would be fine as long as no Canadian contributions were, or will be made, it's simply transferring the accounts from one institution to another - and that they do this all the time for clients in my situation. What makes me nervous is that we would have to first open up and IRA (no concern here) and a ROTH IRA (my concern) with BMO NB. They assure me this is OK, so long as the initial (ROTH IRA) accounts had the election made and no Canadian contributions made. But then I would not have an election filed for the new BMO account. Does anyone have any experience with this?

[nelsona]

Strangely, you do NOT have to file a new election when transferring your Roths, as long as you filed the elections on the Roths you had when you returned.
I am intrigued that you are transferring to BMO. I assume this is the US side of BMO? I am unaware that Nesbitt Burns in Canada has any license to deal with Roths, which are to be held by US brokers.

[nelsona]

I see that NB has a US presence. This should be fine, as long as you are dealing with that side of the house.

[nelsona]

Just a word of caution, depending on how old you are: When you create a new Roth, even from a transfer, you restart the 5-year clock to make the Roth growth completely tax- and/or penalty-free. If you are thinking of using that money soon and are in your mid-50's, you might not want to reset your clock.

[nelsona]

Hopefully NB told yoy this, or they are simply fishing for your money.

[pl0910001]

nelsona wrote:
> Just a word of caution, depending on how old you are: When you create a new
> Roth, even from a transfer, you restart the 5-year clock to make the Roth
> growth completely tax- and/or penalty-free. If you are thinking of using
> that money soon and are in your mid-50's, you might not want to reset your
> clock.


Hey Nelsona, can you expand on this? i thought the 5 year window for Roth accounts applied to the date at which you opened your first roth account. Once a single roth account was established, any that opened subsequent wouldn't be subject to the 5 year clock.

[nelsona]

This is a popular misconception. Every Roth account you open has a five-year clock.

[pl0910001]

nelsona wrote:
> This is a popular misconception. Every Roth account you open has a
> five-year clock.

to clarify, if you're taking the money out of the Roth and over age 59.5, the 5 year rule determines if there are any penalties, correct? For example, if i do a roth conversion, or create a new Roth with a transfer, as in the case above, in the year i turn 58, then if I withdrew funds at age 62 (4 years later), the withdrawal would still be subject to a 10% penalty. if I waited until age 63, then no penalty.
What about the case where i do a roth conversion into an existing roth account. does a 5 year rule reset apply in this case or does the fact that it's the same Roth keep the clock from resetting?

[nelsona]

Conversion ALSO require a five-year waiting period. And it is not only penalty, it is also possibly tax, if you afre pulling out earnings rather than contributions.

Our original poster, if concerned, should be taking ONE of his accounts and putting it in the OTHER, not creating a brand new account.

Of course, if you are 40, it doesn't matter, but at your age, it might.

You need to read up, or have your broker explain these things to you before acting.

[nelsona]

i have seen conflicting articles on the 5-year from opening, but my understanding has long been that a new account requires the five-year rule.

[Will123]

nelsona wrote:
> Hopefully NB told yoy this, or they are simply fishing for your money.

Thanks for the reply, and confirmation that I can open another ROTH after returning to Canada. NB didn't remind me of the 5 year rule, but I am aware of it, and more than 5 years from retirement so OK with that.

[Will123]

nelsona wrote:
> Hopefully NB told yoy this, or they are simply fishing for your money.

Thanks for the reply, and confirmation that I can open another ROTH after returning to Canada. NB didn't remind me of the 5 year rule, but I am aware of it, and more than 5 years from retirement so OK with that.

[Will123]

nelsona wrote:
> Hopefully NB told yoy this, or they are simply fishing for your money.

Thanks for the reply, and confirmation that I can open another ROTH after returning to Canada. NB didn't remind me of the 5 year rule, but I am aware of it, and more than 5 years from retirement so OK with that.