US Citizen residing in Canada - IRA trading solution?

BorderShuffler · Post by **BorderShuffler** » Wed Aug 10, 2011 2:19 am

Hello all,

I am a US Citizen residing in B.C. Canada under a work permit. I currently have an IRA and a brokerage account with Scottrade. The accounts are not huge--about $75k each.

As you might guess, I just recently learned of the restrictions regarding trading these accounts while residing in Canada. (booh!)

I am anticipating residing in Canada for about 5 years before ultimately returning to the US. My chief concern at this time is re-enabling my ability to trade these accounts. I am trying to find a way to enable this short of having to roll my IRA up into an RRSP or something similarly dramatic, since ultimately I plan to return to the US. I should add that I am 37, so I am still many years from anticipated withdrawals from the IRA.

Do I just need to find a US brokerage that is registered also in BC? Would that enable me to trade my IRA and brokerage acct again? Does such a brokerage exist? (i.e. specific recommendations would be great)

Essentially, any way to avoid having to be a spectator to my IRA for the next few years would make me happy.

Any tips appreciated,

--BorderShuffler

nelsona · Post by **nelsona** » Wed Aug 10, 2011 9:11 am

First off, you can't trade in your non-IRA. that's is forbidden by provincial regulators. You should transfer the stocks you hold to a Cdn broker and sell any mutuals.

For IRA, that are allowed to keep you, but it is upto the brokerage, as you have found.
There are some wealth management firms in canada (mainly in BC) that hanlde this. your sum may not make this worth your or their while. Pacifica and Macquarie are the 2 I know of.

Do not attempt to roll your IRA to an RRSP.

ExpatAmerican · Post by **ExpatAmerican** » Wed Aug 10, 2011 9:20 am

Darrell Thompson at Macquarie Private Wealth Corp. is FINRA licensed for IRA's, 401Ks, and is IIROC licensed in BC. He can help you out with your IRAs and cash accounts. He can be emailed at darrell.thompson@macquarie.com.

BorderShuffler · Post by **BorderShuffler** » Wed Aug 10, 2011 12:15 pm

Thanks, neslona and Expat.

Ideally I'd want a self-directed solution--I'm an educated investor and not looking for someone to manage the accounts, just to enable me to trade again. Have you heard of any brokerages that are registered properly?

>>Do not attempt to roll your IRA to an RRSP

Can you elaborate? I assume this is because of the withdrawal penalty and also the headache down the road when I move back to the US?

Thanks again,

--Border

ExpatAmerican · Post by **ExpatAmerican** » Wed Aug 10, 2011 12:30 pm

I am not aware of any self-directed custodians. RE: IRA to RRSP conversion.. between the 10% penalty (if you are under 59 1/2) and possible income tax liability, why bother?

nelsona · Post by **nelsona** » Wed Aug 10, 2011 1:36 pm

Even Cdns planning to never go back to US are advised against transfering IRA to Cn RRSP, because of upfront tax, penaltym, and likelihood that not all of your US tax will be credited on your Cdn return.

There is no mechanism to transfer RRSP to IRA, so this money would now be stuck in RRSP.

mcmoxley · Post by **mcmoxley** » Fri Aug 12, 2011 12:22 am

I'm a US citizen who moved to Canada about 4 years ago as a Permanent Resident. I'm semi-retired and plan to say in Canada indefinitely.

I have substantial IRA and Roth IRA assets from my working days in the US. Fidelity Investments is perfectly fine with letting me transact in my accounts, even though they are aware I am resident in Canada. You might want to consider transferring your IRA to them.

BorderShuffler · Post by **BorderShuffler** » Fri Aug 12, 2011 2:15 pm

Thanks for the Fidelity tip. I spoke with them and they indicated that they can't assist trades or give advice, but my own self-directed trades would be no problem.

I have also been speaking with HSBC Seattle. They are a full-service solution with combined Canadian and US bank accounts plus investment. They can handle the trades in the IRA, but as opposed to Fidelity, the trades would have to be full-service broker executed and I'm waiting on a fee schedule.

--Shuffler

mcmoxley · Post by **mcmoxley** » Fri Aug 12, 2011 5:24 pm

I'm guessing the fees at Fidelity will be lower. I'm a DIY investor also with a bias towards buy-and-hold or buy-and-rebalance ala' the Bogleheads. When I do trade the odd ETF now and then, it's $7.95 per trade. And Fidelity has a suite of 30 commission-free ETFs as well that get you in/out of all of the various asset classes for nothing.

I myself don't see the need for a one-stop brokerage/banking solution that handles US/CAD accounts. I have an account at www.xetrade.com for currency exchange. It's linked to my Canadian and US checking accounts and seamlessly moves money across the border as needed, with less than a 1% commission. The US checking account is also linked to Fidelity, so again everything can be handled online and remotely.

lvtscds · Post by **lvtscds** » Thu Aug 25, 2011 3:47 pm

Fidelity has been great for me too. I left an IRA there and there has been no issue trading (self-directed).

What is your provincial issue that restricts trading in the US as mentioned in the first post of this thread?

mcmoxley · Post by **mcmoxley** » Thu Aug 25, 2011 8:31 pm

I don't think it's a provincial issue...it has to do with some of the US brokerage firms not being licensed to trade securities on behalf of non-US residents.

Before I moved to Canada, all my IRA and Roth IRA accounts were with Vanguard. In 2008, Vanguard informed me that as a Canadian resident, I could no longer trade in my accounts...no adding of funds, no buying of new positions, no switching from one fund to another. All I could do was redeem shares and reinvest dividends/cap gains in positions I already owned. That's when I made the move to Fidelity, who didn't impose those restrictions.

lvtscds · Post by **lvtscds** » Fri Aug 26, 2011 12:50 pm

Thanks. I've been considering a strategy of holding all my investments in Canada reside inside my RSP and having all of my non-RSP investments held at a US brokerage, like Fidelity. My accountant says this should work (there are CRA extra forms if the cost of the non-CDN investments is > $100K aggregate). Haven't fully thought this through, but think it will be the least amount of hassle in extra paperwork.

nelsona · Post by **nelsona** » Fri Aug 26, 2011 1:05 pm

Your broker for non-retirement accounts would need to be licensed in your province of residence. THAT was the issue that was originally alluded to.

lvtscds · Post by **lvtscds** » Fri Aug 26, 2011 1:09 pm

Thanks Nelson. Would that restriction apply if it was all self directed investment?

nelsona · Post by **nelsona** » Fri Aug 26, 2011 2:15 pm

Yes. It is the non-retirement aspect that is not permitted.

Even Spoofing a US address and working with a US broker would put them in serious regulatory space.