Does Fidelity close your account if you move back to Canada?

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OttawaSenators
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Does Fidelity close your account if you move back to Canada?

Post by OttawaSenators »

I am not sure if this has been talked about before in this forum but 3 years ago, when I was thinking about going back to Canada, I called Fidelity and was told they would distribute and cash my 401k should I provide them with a non-US address. My friend was told otherwise the other day when he called Fidelity.

Please share your experience with Fidelity.
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nelsona
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Post by nelsona »

I'm afraid it often depends on the agent you get.

There are no laws/regs that prevent a US firm with dealing with a Cdn resident in a RETIREMENT account. The firms that close accounts do so based on their own policies.

Nothing has been reported here on what Fidelity's official stance is or if it has changed. The advice here is to check before leaving if your current provider will keep you, if so get it in writing, if not, find another firm.
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OttawaSenators
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Post by OttawaSenators »

Ok, here's what I have found on Fidelity's website:

" I’ve recently moved outside the United States. What does that mean for me?

Regardless of where you move, the following applies:

Fidelity does not provide discretionary asset management services to customers who reside outside the United States. If you move outside the United States, your discretionary asset management relationships will be terminated, and certain mutual funds held in those accounts may be liquidated as part of that termination.

The services provided by our representatives are limited to those that are ministerial or administrative in nature. Among other things, this means that our representatives do not engage in discussions with customers about such topics as asset allocation, income planning, or portfolio composition.

Customers residing outside the United States will not be allowed to open new 529 Savings Plan Accounts or Health Savings Accounts (HSAs), or to continue to contribute to existing 529s or HSAs.

Customers residing outside the United States will not be allowed to purchase shares of mutual funds.

There are additional restrictions that may apply, depending on the country where you now reside. Customers in certain countries may be limited to selling their existing holdings and withdrawing the proceeds from their accounts. They will not be able to make deposits in their accounts, or buy any additional securities. In most other countries, the restrictions will be less onerous, but customers may still experience certain limitations (for example, margin lending or options trading may not be permitted, or a certain type of account will experience trading restrictions)."

https://www.fidelity.com/trading/faqs-a ... aq_about13
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OttawaSenators
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Post by OttawaSenators »

So after reading the above on Fidelity's website, is rolling over to IRA right before going to Canada still a good move?

Also, does anyone know of a US brokerage that is more Canadian resident friendly? It may be a good idea to roll 401k over to IRA in Fidelity and then transfer the IRA to a Canadian friendly US brokerage.
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nelsona
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Post by nelsona »

The decision on whether to roll a 401(K) to an IRA has nothing to do with moving to Canada, unless one is being forced to leave the firm handling the 401(K).

But if a firm is willing to deal with you (Fidelity's policy allows one to keep the account, but is highly restrictive of content, in my opinion), then it will do so in either a 401(K) or IRA. Make the decision (now or later) to move to an IRA based on other factors, like investment choices, fees, no penalties, etc.

Additionally, you can always move a 401(K) to an IRA of another firm without first putting it into an IRA with the original firm. If you have to move your fidelity 401(f) to, say, a vanguard rollover IRA, you would just do it in one step.
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nelsona
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Post by nelsona »

The information you are reading seems to apply more to INVESTMENT accounts, rather than 401(K)/IRAs.
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nelsona
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Post by nelsona »

As I said, a call to your firm a few months before leaving US is ALWAYS in order.
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OttawaSenators
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Post by OttawaSenators »

I told my friend to call Fidelity on a different day to get a different agent. He told me the agent put him on hold multiple times to ask supervisors. That gives me an indication that the agent didn't really know what he was talking about. Plus some Americans think Canada is part of the US :) I told my buddy to tell them next time he was moving to Zimbabwe :lol:
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rsargant
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Post by rsargant »

We are Canadian (not U.S) citizens who moved back to Canada in 2012 after spending 7 years working in the U.S.

When we left the U.S, we each had a Roth IRA account with Fidelity who we did make aware of our move.

I have not had any issues at all maintaining our Roth IRA accounts @ Fidelity online.
I can log-in any time to trade stocks or ETFs.

There are things they won't do over the phone. For example, updating our Canadian address can only be done via mail/post.

That's been my experience for what's it worth.
OttawaSenators
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Post by OttawaSenators »

Thanks for sharing your experience! I'm assuming when you cash the IRA, they'll send you a check to your Canadian address because they don't do international ACH or wire transfer.
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nelsona
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Post by nelsona »

Not necessarily. Fidelity US does administer pension funds for non-US employees, so they may be set up to make depaosits.

As always, this is something YOU would call your specific plan admin about.

Of course, someone who would have lived many years in the US would keep a US bank account after leaving, just like Cdns moving to US would keep a Cdn account.
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rsargant
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Post by rsargant »

Yep. In our case, that is an RBC U.S bank account.

Out of curiosity, I went as far as setting up a link between the Roth IRA account @ Fidelity and our RBC US bank account online.

I followed the process through to the final step before making a withdrawal/transfer. Interestingly, the system asked if I wanted any U.S taxes withheld at all.

I don't know what would have happened if I said no but if that works, its a nice option for withdrawing non-taxable Roth contributions . I would just need to report the withdrawal on my 1040-NR.

Not really planning to do this since the Roth account is so valuable. Just a "what if" I've considered for capturing gains on USD/CAD exchange rates without immediate tax implications.
nelsona
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Post by nelsona »

Roth withdrawls would not need to be reported on 1040NR or 1040 if non-taxable.
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rsargant
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Post by rsargant »

Right.

What I meant was that I would have to report the distribution on Form 8606 (Part III) attached to 1040-NR. There wouldn't be any taxable amount to carry over to 1040-NR.
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