Thinking of retiring to Canada – Tax and Investment Questions

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Each year I help over 500 clients file their Canadian and US tax returns as well as plan for both their Canadian and US investment accounts. I also regularly help new US clients plan for their move to Canada.

Feel free to reach out via email at phil@philhogan.com or by phone or text here 250-661-9417.




Question

Hi Phil

I found your contact info through the facebook group for Americans in Canada. Great group by the way, we’ve learned a lot for far.

My wife and I (she’s Canadian and I’m American) will be moving to Canada in late 2021 and we have some planning questions that will need to be answered before then.

Here is a quick breakdown of our situation:

  • Moving to Canada in late 2021
  • We will be selling our house in California before we move and are hoping to buy a house in Victoria soon. Although we’re finding it quite challenging as there is very little on the market currently
  • We have investments both in retirement and regular accounts, including IRAs, ROTH IRAs, a small 401k and 2 regular investment accounts with Fidelity. My wife also has a small RRSP from when she lived in Canada 20 years ago
  • Fidelity has already told us that they cannot hold the account after we move to Canada
  • We have 2 kids that are adult living in the US
  • They will be the beneficiary of our estate

I’ve done quite a bit of reading and I think I understand what our annual tax requirements will look like. I’m most interested in how to manage our US investments before the move. Should we move them up to Canada before we move, can we transfer them to my wife’s RRSP? Can we even open up IRA and ROTH IRA accounts in Canada? Can the investments be transferred up directly or do they need to be sold. This may cause a problem as some of the investments have sizable unrealized gains in them.

Please let me know if you can help answer any of my questions and whether a consultation is required (I’m guessing so).

Thanks

XXXXXX and XXXXX

Answer

XXXXX

Thanks for your email. Yes, having a call or zoom meeting will likely be beneficial, however I should be able to give you some context before our call:

  • Selling the house before becoming a Canadian resident will help simplify matters. I’m assuming the house is also your principal residence.
  • Yes, most US investment advisors cannot help Canadians manage their investments.
  • We have options for transferring not only your regular investment accounts but also your ROTH IRA and regular IRA accounts. We can chat in more detail on the call.
  • Moving the investment accounts up to Canada will be important given the huge amount of T1135 reporting that may be required if the accounts are maintained in the US. Although the IRA will not need to be included on the T1135 the regular investment account certainly will. Not only that, each security will need to be reported individually.
  • Some of the IRA may be able to be transferred to the RRSP, however in most cases it’s not worth the extra work. We can move it up here into a new IRA fully tax deferred and managed from Canada.
  • The investments will also able to be transferred up in kind so that none of the positions will need to be liquidated. That being said, we may want to sell some of the stock as part of the planning before you move up to Victoria.
  • The real estate market is certainly going through some interesting changes. Victoria doesn’t have much inventory at the moment, however we expect that to change in the new year.

Hopefully some of that information helped. Let’s schedule a call to discuss in more detail.

Cheers

Phil

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