RRSPs - Mutual Funds vs. Seg Funds - Regulations

[Arteeh]

Has anyone researched the issue of Canadians living in the U.S. and having their RRSPs in Seg. Funds vs. Mutual Funds?

Seg Funds and their U.S. equivalent, variable annuities, are regulated differently. In Canada, a seg fund is purely an insurance product from a regulatory point of view. Someone needs to be insurance licensed, but not mutual fund licensed to sell Seg Funds. In the U.S., variable annuities are subject to both insurance and investment industry regulations. A person needs to be both life insurance and mutual fund licensed to sell them.

As Seg Funds are not an investment regulated product in Canada, are they considered such in the U.S.? Would a Canadian living in the U.S. have an easier time dealing with RRSPs invested in Seg Funds than they have dealing with RRSPs invested in mutual funds?

I'm not advocating that Seg Funds are better than Mutual Funds, so please let's not turn this into Seg Fund vs. Mutual Fund war. I'm simply wondering if the different regulatory regimes in Canada make Seg Funds easier to deal with for people who own them but live in the U.S.

Thanks!

[nelsona]

the issue is the BROKER, and his compliance with state regs.

If he is compliant, any RRSP-eligible investment that he can sell becomes RRSP-eligible for the state resident.

[Arteeh]

I assume that most Canadians living in the U.S. visit Canada on a regular basis.

If they were meeting with a Canadian broker during a visit to Ontario, could they buy a Seg Fund from him?

If they are buying something that is not considered a security in Ontario, would it be considered a security in California, Arizona or wherever they reside?

I guess it would be up to the insurance company (Canada Life, ManuLife, etc.) to determine whether this is compliant or non-compliant business.

[nelsona]

Most Cdns would have set up a broker with whom they could deal with while in US. period.

Once that is done, they could avail themselves of the full range of products that he sells.