opening a LIRA for RPP rollover as a non-resident of Canada

[riskybiz64]

Canadian with green card, resident of US for 10 years, non-resident for CRA tax purposes (I have the letter from CRA to confirm). Looking to roll commuted value of RPP into a LIRA (as one of the prescribed options available for this amount) but my existing SDRSP custodian (TD Direct Investing, fmr TD Waterhouse) says they cannot open a new LIRA account for a non-resident (even though I have existing SDRSP accounts and can manage on a limited basis from US ... they are SEC licensed in my state). I know I can apply to "unlock" any LIRA funds as a non-resident under the 2008 rules, but my pension administrator won't roll directly into my existing SDRSP even with non-resident documentation. So I can only roll into a LIRA, but can't open a LIRA to roll into! Any suggestions? Would I be able to open a new account if I attended a Canadian branch in person?

[nelsona]

TD's decision is a strange one (and it is their decision, not a regulatory issue, if that is truly their policy), since many of us in the past have rolled monies from other RRSPs/RRIFs/ etc into new TD accounts, even without a pre-existing relationship, and without visiting a branch.

I have found that "trying someone else" sometimes works, especially someone that you may have spoken to before.
I have also found that asking a question on their online help will often get the question sent to the expert in that situation, rather than the person you phoned.

Other may be dealing with another brokerage....

What are the other options the pension is offering, and what is the time limit to decide? If you have some time it might be worth fighting it out with TD.

[riskybiz64]

Thanks. I'll try "another person" and see what they say. Other lump sum transfer options include a LIF (probably the same response and I don't want to take RMWs yet), Life annuity issued by an insurance company (not an attractive option, in my view, given current interest rates and general red tape around this option) or transfer to another RPP (not possible ... no Canadian employer). I can also take a deferred pension or a reduced immediate pension from my previous employer, but for a number of reasons (including that the numbers work out favourably overall) I'm looking at taking the lump sum. I have significant other tax-deferred savings (IRA, 401k) in the US.

[nelsona]

"I'm looking at taking the lump sum." You mean transferring a lump sum (to a LIRA). "Taking" a lump sum means cashing out, which is probably not even permitted at this point (until you get the funds into a LIRA).

I agree that the other options are not so attractive at this time in your life.

I'm pretty sure you can get this fixed with TD.

[riskybiz64]

Update: followed your "try someone else" advice, got a very helpful TD Investment Rep who a) apologized for his ill-informed colleague, b) told me that although I could not apply online or by phone, I could do by mail, and c) sent me all the required forms, and spent 30 minutes walking me through all the details to ensure they would not be rejected. We'll see whether they will open the account once the docs are received, but so far, so good ...

Note: By "take the lump sum", I actually mean both transferring to a LIRA for the amount that is allowed, and also cashing out the remainder (since the total lump sum amount exceeds the CRA allowed amount for a tax-free transfer) ... the cash-out of the excess is not ideal from a current tax bill perspective, but the numbers actually work fairly well vs. a deferred or immediate reduced monthly pension and I can put the $$ to good use.

[nelsona]

You're welcome.

[nelsona]

If you have sufficient left-over RRSP contribution room, you could roll the excess into an RRSP perhaps.

I presume the tax on the excess distributed would be 25% in Canada, plus whatever additional US and state tax you would owe, minus the foreign tax credit on 1040). same when you eventually collapse the LIRA.

I find that collapsing pensions early while in US is quite expensive tax-wise, since it is 100% included in US income.

[nelsona]

You rarely get the full 25% Cdn tax as a credit in US. More like 15%