401K or 403b held by Canadian residents

hector · Post by **hector** » Mon May 05, 2014 4:37 am

Do Canadian residents who own 403b accounts (or 401k's) need to file an election with CRA to defer the tax on these accounts, like they do with Roth IRAs? I have an account which I haven't made any contributions to since I moved back to Canada quite a few years ago. Any growth in the account since I moved back has been from investments inside the account.

I was looking for info on a different topic and came across a paper by an accountant saying that owners of 401ks and other US retirement accounts (not just Roth IRA's) need to file an election every year to get tax deferral.

But as of when I moved back, everything I read said that no special paperwork was necessary to keep the tax deferred status of the account. Did something change in the last 7 years?

nelsona · Post by **nelsona** » Mon May 05, 2014 9:16 am

No special filing is required for deferral.

Just be sure to check the rules of T1135 every year to make sure that you don't have to report their existence along with your other foreign assets.

hector · Post by **hector** » Mon May 05, 2014 12:57 pm

Thanks nelsona.

I just quickly read the form and the Q/A site for T1135 and did not notice any wording saying that retirement accounts and pension-type accounts are exempt from reporting. I think I'll report it on the form just to be sure. Do you know if the rules have already changed?

nelsona · Post by **nelsona** » Mon May 05, 2014 4:57 pm

That is why I asked you to check

rsargant · Post by **rsargant** » Mon May 05, 2014 10:34 pm

The instructions for T1135 state..

Specified Foreign Property does not include:

an interest in a trust described in paragraph (a) or (b) of the definition of
"exempt trust" in subsection 233.2(1);

Paragraph (a) of 233.2 (1) describes "a trust that is governed by a foreign retirement arrangement" As always, its impossible to be sure but it sounds like that would continue to exempt traditional U.S IRA & 401K from T1135 reporting.

If you care to draw your own conclusionsâ€¦

http://laws-lois.justice.gc.ca/eng/acts ... ml#docCont

nelsona · Post by **nelsona** » Tue May 06, 2014 10:10 am

Thank you rsargent. Again, that is why we should check every year as this form changes substantively each year.
I believe in the past it used to explicity exclude US retirement accounts.

So know they have broadened the definition while making the instructions more vague.

I wonder if they get help from IRS to modify these forms?

hector · Post by **hector** » Thu May 08, 2014 2:46 pm

Thanks rsargent and nelsona.

The vagueness is frustrating. Since I don't like uncertainty, I will definitely file the T1135. Now all I have to do is figure out how the different categories on that form apply to the account.