Receiving and inherited ROTH IRA in Canada

What to do with an inherited ROTH IRA in Canada?


Hi Phil

I live in Ottawa and i just got word that I will be receiving and inherited ROTH IRA from my late Grandmother in the next few months. I actually didn’t know what a ROTH IRA was until I looked it up. It’s not massive, but I think it should be over $50,000.

I don’t need the money right now and was reaching out to see if you had thoughts on what I should be doing with the money. Should I be pulling money out of the ROTH or leaving it in the US. I was also told that it needs to stay in the US or it will be taxed.

Any help would be appreciated.





Thanks for the email.

You’ll want to consider a few issues related to the ROTH:

  • Assuming you’ll be receiving the ROTH before the end of the year you’ll want to ensure that you file the necessary ROTH IRA tax elections with CRA before the deadline of your 2021 Canadian income tax return. The election allows you to ensure the income earned within the ROTH (interest, capital gains, dividends, etc) are deferred from taxation. The election also allows you to withdraw funds from the ROTH tax-free for both Canadian and US purposes.
  • if you don’t need the money right now it might make a lot of financial sense to simply leave the money invested in the ROTH and let it grown and compound tax free (for both Canadian and US purposes) for the next 10 years. At the end of 10 years you’ll need to fully withdraw and de-register the money from the ROTH. Make sure to take all the money out of the ROTH before the 10 year window is up to ensure you are not charged a 50% penalty.
  • There shouldn’t be any real reporting for the ROTH as it’s specifically excluded from T1135 reporting.

I hope the information above was helpful. Let me know if you have any other questions.





  1. I am a Canadian citizen and resident only, have Roth IRA from work in USA, did file the election with cra appropriately when I moved back to Canada. When I’m 60, planning on taking Roth distributions. Will I be required to file a 1040nr (assuming no other USA taxable event) and do you need to report that non taxable distribution to the cra?


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