I, a USC resident in Canada married to NRA, am considering cashing in my USD$200,000 legacy IRA from the USA and investing the funds here in Canada. I am younger than retirement age and have three kids.
What are the tax implications both in USA and Canada?
Would gifting some of it to my kids help reduce the tax cost?
I am aware of the annual $14,000 or so gift exclusion whereby I could gift each child that amount in Dec 2015 and again in Jan 2016 without incurring gift tax.
Thanks
whats best way to cash out IRA and invest in Canada
Moderator: Mark T Serbinski CA CPA
You would be liable for 25% tax in US, and the entire amount would be added to your income in Canada.
Gifting could only increase taxation, since you might subject your self to US gift tax, but it would never reduce taxation in either country.
The more you would put in RRSP as a transfer the more you might recoup some of the taxes you owed to Canada and get credit for US tax. But ypou are looking at a hefty tax bill
The IRA rto RRSP scheme has been explained enough here.
Gifting could only increase taxation, since you might subject your self to US gift tax, but it would never reduce taxation in either country.
The more you would put in RRSP as a transfer the more you might recoup some of the taxes you owed to Canada and get credit for US tax. But ypou are looking at a hefty tax bill
The IRA rto RRSP scheme has been explained enough here.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best