Tax efficient plan for holding investments during a US to Canada move (US Citizens)

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Topic Author
dgroyal
Posts: 11
Joined: Tue Jan 23, 2018 2:23 pm

Tax efficient plan for holding investments during a US to Canada move (US Citizens)

Post by dgroyal » Tue Jun 11, 2019 12:12 pm

Hello. My wife and I are likely moving to Canada in the next year. We are both US citizens and will be moving as permanent residents.

We have a variety of investment accounts, and I want to make sure I handle everything as best I can in terms of avoiding tax penalties / getting accounts frozen.

Current accounts:
Vanguard 403b
Vanguard Roth IRA
Vanguard taxable
Fidelity 403b
Fidelity Roth IRA
TIAA 403b
Nationwide 457

My current plan is to consolidate the 403bs (as a traditional IRA) at TD Ameritrade, roll the Roth IRAs to TD Ameritrade, and keep the 457 at Nationwide.

1) In reading through the forum, a lot of people recommend Schwab for expat US citizens. Are there advantages to Schwab vs TD Ameritrade? I picked TD because we'll likely use them for banking and they seem familiar with cross-border issues.
2) Can anyone point me to anything definitive re: the CRA's opinion on 457s? I'd like to just hold them where they are, because if I roll them into a tIRA we'll end up with an age restriction. Nationwide has said they're OK with a non-resident US citizen keeping an account open.
3) Where should I move our taxable investments to? TD says they can't do it? Maybe this is a reason to go with Schwab for everything...

I've posted similar questions on FWF, and it was recommended that I post them here as well. Thanks so much for your help! And if any additional info would be helpful, please don't hesitate to ask.

mchampse
Posts: 184
Joined: Mon Feb 26, 2007 1:45 am

Re: Tax efficient plan for holding investments during a US to Canada move (US Citizens)

Post by mchampse » Tue Jun 11, 2019 1:18 pm

I made the move in the other direction. Some general thoughts:

-TD seems to be the best bank in terms of cross-border services, though that isn’t saying much. I still have my RRSP there.

-For your taxable, you may want to consider opening a TD Canada brokerage account (or any Canadian brokerage) and putting the assets there. You can’t hold American mutual funds, though you can hold ETFs.

-Sometimes it’s easier to beg for forgiveness. My RRSP had my parents address for a long time. I reported the balances to the IRS every year as required.

Topic Author
dgroyal
Posts: 11
Joined: Tue Jan 23, 2018 2:23 pm

Re: Tax efficient plan for holding investments during a US to Canada move (US Citizens)

Post by dgroyal » Tue Jun 11, 2019 4:03 pm

Thanks! Moving my taxable to something Canadian and holding American ETFs seems like it might be the way to go.

And I could use a family members address, I just don't think it's worth the hassle. I can hold Vanguard ETFs at any brokerage.

Valuethinker
Posts: 38056
Joined: Fri May 11, 2007 11:07 am

Re: Tax efficient plan for holding investments during a US to Canada move (US Citizens)

Post by Valuethinker » Wed Jun 12, 2019 9:47 am

dgroyal wrote:
Tue Jun 11, 2019 4:03 pm
Thanks! Moving my taxable to something Canadian and holding American ETFs seems like it might be the way to go.

And I could use a family members address, I just don't think it's worth the hassle. I can hold Vanguard ETFs at any brokerage.
(warning: I am not a US citizen and I no longer live in Canada - treat all the below with due caution)

Via this Forum you can link to the Financial Webring. A Canadian site which is very helpful.

I suspect PFIC will kill you? You will not want to hold Canadian domiciled funds - only US ones (US listed) ie US ETFs. Because of the way IRS taxes non-US funds.

Which can be done via a Canadian discount brokerage. Try TD Securities (TD Bank) & BMO (Bank of Montreal) at least - compare costs.

But don't lose your American accounts if you possibly can keep them. I don't know how Canada will treat them from a tax point of view though.

If you ever return to America then I think you will have tax issues. California for example does not recognize your RRSP (401k equivalent) and TFSA is also a no no (that's a post tax investment account). Since you have citizenship you will have to file in your last state of residence, as I understand the position, so maybe these issues will confront you upon moving?

There is an agreement re Canada Pension Plan (Quebec PP) and US Social Security and crediting of years. It's generally to your advantage to get those extra years in US SS - the max benefit is much higher. That needs to be checked.

Topic Author
dgroyal
Posts: 11
Joined: Tue Jan 23, 2018 2:23 pm

Re: Tax efficient plan for holding investments during a US to Canada move (US Citizens)

Post by dgroyal » Wed Jun 12, 2019 11:56 am

Thank you! I know (because of PFIC) that I should steer clear of Canadian mutual funds / ETFs and stick to US ones.

And I currently live in Florida, which has no state income tax, so I should be OK. And I know that TFSA is a no-no. Thanks!

PCPilot
Posts: 8
Joined: Sun Mar 25, 2018 11:29 am

Re: Tax efficient plan for holding investments during a US to Canada move (US Citizens)

Post by PCPilot » Wed Jun 12, 2019 12:21 pm

Don't forget as well that Revenue Canada may not consider your Roths to be tax-exempt. (This may have changed, it certainly was the case a few years back.)

Topic Author
dgroyal
Posts: 11
Joined: Tue Jan 23, 2018 2:23 pm

Re: Tax efficient plan for holding investments during a US to Canada move (US Citizens)

Post by dgroyal » Thu Jun 13, 2019 9:45 am

Thanks! Re: Roths, my understanding is that I need to declare them to the CRA in my first tax filing and not contribute to them after I move, but that I should be OK if I do this:

http://www.cra-arc.gc.ca/E/pub/tp/itnew ... s-43-e.pdf

I sent an email to the address mentioned in that newsletter, but I haven't heard back yet.

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