401k when moving to canada

Nov 7, 2020 7 Comments

I'm moving to Canada and trying to decide between three options on what to do. I'm not 59.5 yet ๐Ÿ˜Š

Option 1: Rollover the money to Traditional IRA and leave it there.

Question: My account is with Fidelity. Are they also licensed in Canada so that this option is possible? If not, where can I open a Traditional IRA account so that this option would be possible.

Option 2: Rollover to Roth IRA before moving to Canada.

Question: I'm in California. Since I'm moving to Canada permanently, is there a way to get out of paying state taxes?

Option 3: Move this to RRSP.

Question: What are the benefits of this over option 1 or 2? Another thing I'm not clear is would this option (or even option 2 for that matter) incur 10% penalty?

Any other better option that I don't know of?

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TOP 7 Comments
  • Ally Financial / Mgmt
    mb07

    Go to company page Ally Financial Mgmt

    mb07
    If you move the money to Canada it will be taxed as income. Plus penalties.

    I would rollover and keep it in US
    Nov 7, 2020 4
  • Apple / Eng
    shdioswj66

    Go to company page Apple Eng

    shdioswj66
    This is a very complicated situation. Highly recommend consulting a CPA specializing with these situations. For example, RRSP/TFSA are not recognized by US, so a US citizen would need to recognize any gains or dividends on their US tax returns.
    Nov 7, 2020 0
  • Apple
    MhlI03

    Go to company page Apple

    MhlI03
    You can't just leave the account open and then when you take our money during retirement, you use the foreign tax credit on your Canadian tax returns to get back the taxes America withheld ?
    Nov 7, 2020 0