Hello. I am a Canadian citizen moving to the US soon as a PR- permanent resident. I am trying to determine what to do with an RRSP account here in Canada and if so, when (before or after I become a US resident?).
The amount is relatively small (would keep me within the lowest Canadian income tax bracket) and would be my only Canadian income for 2018 if I withdraw it this year. I don’t plan to keep contributing to it while in the USA and will not be retiring for a very long time still.
My questions are: 1) If I withdraw all of the RRSP funds now in 2018, should I do so before I become a US resident, for tax purposes? Does it matter when I withdraw? 2) what are the implications if I move to the US and leave the RRSPs as is in Canada? 3) what are the implications of leaving a savings account open in Canada?
Ideally, I’d like to keep future tax obligations relatively uncomplicated in both countries (if possible)!
Any recommendations are appreciated!
What to do with RRSPs -Canadian citizen moving to US as PR
Moderator: Mark T Serbinski CA CPA
If you wait until you are US resident, you will pay 25% flat tax on the entire withdrawal: no more no less.
If you withdraw before leaving, you will, in the end, pay the graduated rate, plus will have some deductions. From what you say it may be best to just take it now.
When it comes time to file your departure tax, you may have some opportunity to lower the tax if you don't work in US for rest of year.
For US tax purposes, sicne you will likle file a fill-year 1040 with your spouse, you will report the RRSP withdrawal as gross pension income, and very little as net income (the gains your RRSP has made over book value) and you can use the 25% tax as a credit of deduction on your 1040. This will be whenther you sell now or after you move, so that doesn't really matter.
If you withdraw before leaving, you will, in the end, pay the graduated rate, plus will have some deductions. From what you say it may be best to just take it now.
When it comes time to file your departure tax, you may have some opportunity to lower the tax if you don't work in US for rest of year.
For US tax purposes, sicne you will likle file a fill-year 1040 with your spouse, you will report the RRSP withdrawal as gross pension income, and very little as net income (the gains your RRSP has made over book value) and you can use the 25% tax as a credit of deduction on your 1040. This will be whenther you sell now or after you move, so that doesn't really matter.
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