How to transfer US investments to Canada, including ROTH IRA

Question

Hi Phil

We spoke a few years back when my wife and I were planning on moving to Victoria. We put those plans off for a few years but now we’re committing to actually make the move next year.

To give you a recap on our situation…my wife is a dual citizen and I’ve applied for my Canadian PR. We hope to move close to March of next year.

We have the following assets

• House in Washington (our principal residence)
• Investments in ROTH, trad IRA, regular investment account and small company 401k
• 2 cars and other household good

I’ve done a lot of research on what the tax returns will look like when we move, but we’ll certainly need help from someone like you to prepare and file the returns.

Our main questions related to the investments:

1. Our current wealth manager says that she can’t hold most of the accounts when we move to Canada. She did suggest using a US relative address to possibly keep the accounts in the US. Does this seem right to you?
2. Will we be paying tax on our tax deferred accounts such as the IRA and ROTH when we move to Canada
3. We’ll be working for another 10 years before retiring. Should we continue to contribute to our ROTH and trad IRA after we move to Canada?

I know this is a lot to answer so let me know if we need to schedule some time to work through all this.

Thanks again

XXXXXX

Answer

Hi XXXXX

Thanks for the email.

Considering the number of issues outlined above I would suggest that we schedule some time to chat about this issues in more detail. I will however give you some general guidance on the questions above to help with the potential planning:

1. That’s correct, unless your US advisor has a dual country license they should not be able to manage accounts for Canadian residents. Simply applying a US address to the account does not only not solve the problem, but it actually against securities regulations.
2. Your registered accounts (IRAs and alike) will continue to be deferred from both Canadian and US taxes. That being said, some accounts such as ROTH IRAs require that an election is filed with CRA to ensure the account maintains it’s tax deferred status.
3. You certainly won’t be able to contribute to your ROTH while a Canadian resident and although you technically could contribute to your traditional IRA you likely won’t want to as you won’t get a deduction for Canadian purposes. If you’re still working it’s going to be much more tax advantageous to open and RRSP and contribute that way.

Hope that helps a little. The information above is only general in nature and we should chat in detail about your tax and investment planning to ensure all issues are properly covered.

Cheers

Phil