In a couple of weeks I'll be moving to California on TN status. I have about $35K each in a TFSA and RSP (all mutual funds).
1) Should I transfer my TFSA holdings to a taxable account before leaving? Or should I deposit funds in there to use up all my remaining room?
2) I have about 15K difference between the "book value" and "market value" in the RSP (gains). Would shuffling the investments around to eliminate capital gains make any difference to potential US tax liabilities? Should I plan to cash it out when I'm in the US? Would the CRA consider me a US resident?
3) Any issues with me maximizing my IRA/401K contributions for 2015 when I start working in the US?
I plan to pay an accountant to deal with my 2015 holdings, but I assume that I should be able to simplify things before I go.
Moving to US on TN: What do to with RSP and TFSA?
Moderator: Mark T Serbinski CA CPA
1. Your TFSA is no ggod in US. close It before going.
2. sell your RRSP before leaving so that you can use the tuition credits; you will not be able to use the credits after you begin earning US income. You will be non-resident the day you move to US, so get moving on this.
3. No issues, but consider using Roths and Roth 401(k) rather than IRA and 401(k), you need to be saving money that will be tax free in the future, even if you return to Canada.
2. sell your RRSP before leaving so that you can use the tuition credits; you will not be able to use the credits after you begin earning US income. You will be non-resident the day you move to US, so get moving on this.
3. No issues, but consider using Roths and Roth 401(k) rather than IRA and 401(k), you need to be saving money that will be tax free in the future, even if you return to Canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Thanks.
I don't have the details on the 401K plans available at my employer yet. I know there's no matching available though. I assume that if there's no Roth 401K is available I should still maximize it.
1) Does it make sense to put in after tax contributions (if the option is available) into a regular 401K (if Roth not available) after exhausting the deductible amount? I see information on the internet about the possibility of being able to convert those extra contributions to a Roth IRA at some point in the future (eg Notice 2014-54).
Looks like for 2015 I'd be able to make a direct contribution to a Roth IRA since my income will be under the limit. For 2016, I might have to look into a IRA->Roth conversion, but I'll talk to an accountant about that then.
I don't have the details on the 401K plans available at my employer yet. I know there's no matching available though. I assume that if there's no Roth 401K is available I should still maximize it.
1) Does it make sense to put in after tax contributions (if the option is available) into a regular 401K (if Roth not available) after exhausting the deductible amount? I see information on the internet about the possibility of being able to convert those extra contributions to a Roth IRA at some point in the future (eg Notice 2014-54).
Looks like for 2015 I'd be able to make a direct contribution to a Roth IRA since my income will be under the limit. For 2016, I might have to look into a IRA->Roth conversion, but I'll talk to an accountant about that then.
after tax 401(k) IS roth401(k).
You have 2 pots to put money in: your 401(k)/Roth 401(k), and your IRA/Roth.
In both pots I would be using the roth after-tax option in your case.
You have time for this.
Focus on your Cdn accounts right now. Those will be the headaches if you don't manage these now.
You have 2 pots to put money in: your 401(k)/Roth 401(k), and your IRA/Roth.
In both pots I would be using the roth after-tax option in your case.
You have time for this.
Focus on your Cdn accounts right now. Those will be the headaches if you don't manage these now.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
[quote="nelsona"]
Focus on your Cdn accounts right now. Those will be the headaches if you don't manage these now.[/quote]
Thanks. I think I understand now.
I think my plan should be to:
a) Liquidate my TFSA and RSP accounts
b) Use these funds to buy many individual stocks (to hold for a few decades) instead of Canadian Mutual Funds or ETFs.
I'd ideally like to put everything in a single Canadian Index fund, but I've been looking online and I'm seeing all this information about Canadian mutual funds/ETF being considered PFICs and having onerous reporting requirements and tax consequences. Is this correct?
Focus on your Cdn accounts right now. Those will be the headaches if you don't manage these now.[/quote]
Thanks. I think I understand now.
I think my plan should be to:
a) Liquidate my TFSA and RSP accounts
b) Use these funds to buy many individual stocks (to hold for a few decades) instead of Canadian Mutual Funds or ETFs.
I'd ideally like to put everything in a single Canadian Index fund, but I've been looking online and I'm seeing all this information about Canadian mutual funds/ETF being considered PFICs and having onerous reporting requirements and tax consequences. Is this correct?
CaDines: "I'd ideally like to put everything in a single Canadian Index fund, but I've been looking online and I'm seeing all this information about Canadian mutual funds/ETF being considered PFICs and having onerous reporting requirements and tax consequences. Is this correct?"
First of all, yes, this is correct.
Secondly, listen to nelsona. You will not be able to make these investmets in a Canadian brokerage account after you have moved to the US.
There is, however, an alternative if you want to invest in Canada. You will open a US brokerage account after you have moved there. Then there are US-managed index funds/ETFs of the Canadian market which you can buy in your US account. If they are US domiciled and managed, they will not be PFICs. Unfortunately, they will have higher management expense ratios than similar ETFs purchased in Canada. For example, check out the iShares fund EWC. Their MER is 0.48%, not that bad, but higher than you would pay for a Canada index fund managed out of Canada (iShares fund XIU has an MER of 0.17%). Happy hunting.
First of all, yes, this is correct.
Secondly, listen to nelsona. You will not be able to make these investmets in a Canadian brokerage account after you have moved to the US.
There is, however, an alternative if you want to invest in Canada. You will open a US brokerage account after you have moved there. Then there are US-managed index funds/ETFs of the Canadian market which you can buy in your US account. If they are US domiciled and managed, they will not be PFICs. Unfortunately, they will have higher management expense ratios than similar ETFs purchased in Canada. For example, check out the iShares fund EWC. Their MER is 0.48%, not that bad, but higher than you would pay for a Canada index fund managed out of Canada (iShares fund XIU has an MER of 0.17%). Happy hunting.
... and don't fall into this "I don't want to bring my money to US because the exchange rate is so low" mentality. The exchange rate is low because the C$ isn't worth as much. period.
You are moving to US. Leave a little money in a Cdn bank account (and keep one no cost credit card) for future Cdn transactions (using your US address), and move your life to US.
You are moving to US. Leave a little money in a Cdn bank account (and keep one no cost credit card) for future Cdn transactions (using your US address), and move your life to US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
nelsona: ... and don't fall into this "I don't want to bring my money to US because the exchange rate is so low" mentality. The exchange rate is low because the C$ isn't worth as much. period.
Fortunately, most of my investments were in US and other foreign funds, so switching to all US-based investments won't affect my asset mix too much. I'll reconsider my asset mix at a later time.
In any case, I cashed in my investments and exchanged the funds already after your advice, so I'll be able to use it in the US. I plan to maximize my 401K contributions (using Roth if possible and as must salary as allowed) until I reach the maximum contribution for this year.
I read about being able to add additional after-tax contributions to a 401K after reaching the $18K limit this year for the Roth 401K. If I understand correctly, you can split the taxable and non-taxable portions of these after tax contributions between a traditional and Roth IRA after leaving an employer or hitting age 59.5. Would it make sense to do this if I maximized all other tax-shelters? This is an description of this method that I've read about: https://www.linkedin.com/pulse/20140924 ... ce-2014-54
Thanks.
Fortunately, most of my investments were in US and other foreign funds, so switching to all US-based investments won't affect my asset mix too much. I'll reconsider my asset mix at a later time.
In any case, I cashed in my investments and exchanged the funds already after your advice, so I'll be able to use it in the US. I plan to maximize my 401K contributions (using Roth if possible and as must salary as allowed) until I reach the maximum contribution for this year.
I read about being able to add additional after-tax contributions to a 401K after reaching the $18K limit this year for the Roth 401K. If I understand correctly, you can split the taxable and non-taxable portions of these after tax contributions between a traditional and Roth IRA after leaving an employer or hitting age 59.5. Would it make sense to do this if I maximized all other tax-shelters? This is an description of this method that I've read about: https://www.linkedin.com/pulse/20140924 ... ce-2014-54
Thanks.
Your Roth401(k) and 401(K) have a combined limit of 18K. No more. You also a Roth/IRA combined limit as well, of ~6K. This is apart from work.
Your company plan will advise you on all this.
Your company plan will advise you on all this.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing