Canadian working for US firm in Canada - pensions

[windman]

A very helpful forum. Thank you very much.

I'm a Canadian, returning to Canada after a long period of working in Britain. I'm now working in Canada for an American firm since June 2005, and have a few questions:

1) For a 401k pension plan equivalent in Canada, is the most advantageous solution for the company to make contributions equivalent to the 401k into a personal RRSP? How are the employer's contributions therefore taxed, or is it a full deduction as per my own contributions?

2) Can I even open an RRSP in 2005 given that my maximum contribution cannot be estimated on a 2004 return, as I haven't worked in Canada since th early 90s. Also I've worked an incomplete year in 2005.

3) Is the best solution to bring my 9 years of UK private pension contributions over to Canada and transfer it to the RRSP? Is this taxable or is it inserted as previous years' contributions.

thank you

[nelsona]

Leave your UK pension where it is for now. There is no point bringing it here, and neither CRA notr your company would not consider thsi a contribution to a pension paln: it would be a rollover

As to getting the equivalent of 401(k) as a Cdn worker, I wrote a response on this yesterday.

2) Can I even open an RRSP in 2005 given that my maximum contribution cannot be estimated on a 2004 return, as I haven't worked in Canada since th early 90s. Also I've worked an incomplete year in 2005.

If you do not have contribution room for 2005 (CRA would know; you may have some from the '90s) then none of the contributions you make between now and March 1, 2006 would be deductible in 2005. Now that is it 2006 however, you can contribute up to your 2006 limit (plus $2000) based on your earnings in 2005. You can estimate 18% of your wages; this number will be firmed up after you submit your 2005 tax return. This should be more than enough to get you your comapny match. Most 401(k) plans match only the first $5000-$7000 of any employee contributions, so you should be OK for this year and things will loosen up after this year, as your contribution limit will be muchj bigger.

All this requires buy in from your firm.