saving for retirement while temporarily in canada

lanman2000 · Post by **lanman2000** » Wed Jul 29, 2009 12:54 pm

Hi there,

I am a dual US/canadian citizen currently residing in Canada. A company in Toronto wants to hire me as a full time employee up here but they do not have a company sponsored RRSP which I understand is sheltered for both canada and us. With this in mind what is the best way for me to save for retirement while I am in canada? I will be here either 2 or 3 years at most.

The options I am thinking of are:

1) can i contribute to my US based traditional IRA? what about a Roth IRAs?
2) should i just pile into a TFSA? although the limit is pretty low and i cant get a current year tax deduction like i was used to getting with my 401k in the states
3) i will be working for a company that does payroll in both canada and us. They also do all of their business in the US (commercial property mgmt) but their offices where i'll be working are in Toronto. Should I see if i can somehow get into their 401k plan and/or get paid on their US payroll? Or is that a no-no because i'm a canadian resident now? (one thing to note is i have a house in california but i'm renting it out)
4) a self directed RRSP i understand is not sheltered still even with the fifth protocol changes so thats a bad option right?

Any other options i'm not considering when i should be?

Any help is MUCH appreciated. Thanks!

nelsona · Post by **nelsona** » Wed Jul 29, 2009 1:27 pm

TFSA doesn't give a deduction -- and it is not sheltered in US.

You can't contribute much to an RRSP in your first year of Cdn residency because your limit is based on past wages.

You can contribute to an IRA, but you won't get a deduction in canada.

You work in canada, thus you must be on their Cdn payroll.

RRSP are sheltered in US and always have been -- you just have to file one peice of paper. Its the deductibility of the contributions in US that have changed for employee plans (now they are), but not for private RRSPs (they still aren't).

But all said, your best bet is still an RRSP because it reduces your taxes, and you will not have to pay US tax on the portion you contribute when you take it out.

lanman2000 · Post by **lanman2000** » Wed Jul 29, 2009 2:18 pm

okay so rrsp it is then. What about for a dual status year though? This year i spent half in california and will spend the other half here in Ontario. I already put 9,000 into my 401k in the US by the time i moved. Does that mean the most i can put into my RRSP is 16,500 (us limit) - 9,000 = 7,500 USD? I have read that my contrib limit is the US 401k one since its lower than the canadian rrsp one per the treaty. Correct?

nelsona · Post by **nelsona** » Wed Jul 29, 2009 8:30 pm

No. Since you will be contributing to a private RRSP, you are notlimited by the traty as to how much you can contribute, since you are not getting any US deduction.

You are however limited by CRA as to how much you can contribute. If you have never worked in canada before 2009, that limit is ZERO. As I aid earlier, you cannot contribute to RRSP in the year you first work in canada.

lanman2000 · Post by **lanman2000** » Thu Jul 30, 2009 5:19 am

Ok that makes sense. Thanks!