Investment suggestions for IRA once back in Canada

ExpatAmerican · Post by **ExpatAmerican** » Mon Dec 06, 2010 3:29 pm

I would suggest that the US IRA adminstrator/broker would need to be licensed in the province of the now Canadian resident IRA holder, unless the broker has applied for (and received) a conditional exemption from registration. This exemption is referred to as the National Instrument 35-101. Basically, you need to ask your current broker if 1.) they are licensed in your province of residency, or 2.)have received this exemption.

If the answer is "no" to both, then you need to find a broker that is licensed to do this business. Darrell Thompson at Macquarie Private Wealth Corp. in Toronto, ON is licensed in 28 states and helps such cross-border clients. He can be reached at darrell.thompson@macquarie.com

sxc234 · Post by **sxc234** » Mon Dec 06, 2010 3:39 pm

I understand what needs to be done, but what if the account holder doesn't do it. What are the legal consequences to the account holder? Does the IRS take away their IRA account, pay penalties/fines, jail? I'm just curious what the consequences are.

nelsona · Post by **nelsona** » Mon Dec 06, 2010 5:42 pm

As I've explained, the issue is the broker's responsibility. HE would be violating any provincial regs, not you.

IRS wouldn't do anything. It's not their regs.

Rickerbucks · Post by **Rickerbucks** » Mon Dec 06, 2010 11:10 pm

[quote="sxc234"]I understand what needs to be done, but what if the account holder doesn't do it. What are the legal consequences to the account holder? [/quote]

zero

In fact....if the advisor is not licensed you can demand your money back on anything you lost and keep any investment that went up in value.

No loose situation for you.

nelsona · Post by **nelsona** » Tue Dec 07, 2010 7:20 am

Which is why the instant they find out you have put them in this situation, they close down your account.

best to find a broker willing to deal with you legally in your situation, than having to close your account and pay tax right then.

ExpatAmerican · Post by **ExpatAmerican** » Tue Dec 07, 2010 11:08 am

As far as legal ramifications for the IRA holder, I am not aware of any, but would agree with Nelsona that the broker could be in trouble. In my experience the issues you may have would be with your provider. Many brokers (once they find out you are a non-US resident) will restrict you to selling transactions only, which is quite onerous in itself. Additionally, Wells Fargo, Morgan Stanley and CUSO Financial Services have all sent letters to their Canadian resident IRA clients in the last 3 months, informing them that they will be closing these accounts and these clients have 3 options: 1.) transfer the account to a licensed broker, 2.) take physical delivery of the securities, 3.) sell all securities, take a check and close the account. Surprisingly short deadlines to act accordingly, I might add. The latter 2 options would have adverse tax implications for the IRA holder, obviously. I have dealt with many clients that have received these letters, and all have chosen to transfer, so I cannot tell you if these firms would actually resort to such draconian measures (second 2 options). For what it's worth...