A:

It does not appear that this is an option for you. The current version of the U.S. Code and the U.S./Canada Treaty do not allow for transfers or rollovers between <?xml:namespace prefix = st1 /?>U.S. and Canadian retirement plans. Furthermore, the Canadian retirement plan may not consider the assets eligible (to be transferred to the plan). Should you remove the assets from the IRA, the transaction would be considered a taxable distribution from the IRA unless the assets were rolled over to an eligible retirement plan as defined by the U.S. Tax Code.

Because you reside outside of the U.S., the rate at which you are taxed is determined by your U.S. citizenship or resident alien status. If you are a U.S. citizen or resident alien and the amount is not being sent to a home address in the U.S., the IRA custodian must withhold 10% for federal taxes; this withholding cannot be waived. If you are not a U.S. citizen or resident alien, the IRA custodian will also withhold 10% for federal taxes; however, in this instance, you can choose to waive the federal withholding and then become subject to the Canadian treaty rate. Certain documentation must be provided to the IRA custodian if the treaty rate is to be applied.


(For more information about IRA taxation, read Introductory Tour Through Retirement Plans, Moving Plan Assets: How to Avoid Mistakes and Combining Your Plan Assets? Not So Fast!)

This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS
  1. I have just been laid off. Can I use my 401(k) for living expenses now and report ...

  2. How do I roll over a Simple IRA to a Roth IRA?

  3. I am a first-time home buyer. If I take a distribution from my 401(k) to purchase ...

    As you may already know, you must meet certain requirements, outlined in the 401(k) plan document, to be considered eligible ... Read Answer >>
  4. What happens to my 401(k) plan if I switch jobs?

    Roll over your old 401(k) plan to your new 401(k) plan or an IRA, cash it out, or leave it alone. Which option is right for ... Read Answer >>
  5. Can I roll over a profit-sharing plan to an SEP IRA account without suffering any ...

    It depends. If the transaction is processed as a direct rollover to the SEP IRA, then no taxes will be withheld. Through ... Read Answer >>
  6. I have just been laid off. Can I use my 401(k) for living expenses now and report ...

    Any amounts withdrawn from your 401(k) plan must be treated as ordinary income for the year the amount is distributed from ... Read Answer >>
Related Articles
  1. Retirement

    Tips For Moving Retirement Plan Assets

    Moving assets is common when changing jobs or retiring, but you have to do this carefully to avoid penalties.
  2. Retirement

    Why Rollover Your Retirement Assets into an IRA?

    If you're in the workplace now, chances are you'll ask yourself this question eventually: 'Should I rollover to an IRA?' Here's a guide.
  3. Retirement

    Wealth-Building IRA Rollovers

    Rollovers allow your tax-deferred retirement assets to grow, even when the world around you is changing.
  4. Retirement

    Avoid the Most Common IRA Rollover Mistakes

    Avoid paying excess taxes by learning some simple transfer rules.
  5. Retirement

    Guide To 401(k) And IRA Rollovers

    Follow the steps detailed below when you need to roll over your 401(k) or IRA account to be sure you preserve tax benefits and avoid penalties.
  6. Retirement

    Unexpected 1099-R Form: What To Do

    Did your IRA custodian report distributions you thought were non-reportable? Find out what went wrong.
  7. Retirement

    Moving Retirement Plan Assets: How To Avoid Mistakes

    Sometimes things go wrong in a simple transfer of funds. Make sure you know how to avoid penalties.
  8. Retirement

    11 Things You May Not Know About Your IRA

    These little-known features will help you get the most out of your retirement savings.
  9. Retirement

    No Need To Rush End-Of-Career Retirement Planning

    Your retirement is fast approaching, but your retirement plan needn't change as quickly.
  10. Retirement

    Should You Roll Over Your 401(k)?

    Before moving your retirement funds into another account, consider your options.
RELATED TERMS
  1. Rollover IRA

    A special type of traditional individual retirement account into ...
  2. IRA Rollover

    A transfer of funds from a retirement account into a Traditional ...
  3. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  4. Eligible Rollover Distribution

    A distribution from an IRA, qualified plan, 403(b) plan or 457 ...
  5. IRA Plan

    A plan that individuals may establish to arrange and plan for ...
  6. IRA Transfer

    The transfer of funds from an Individual Retirement Account (IRA) ...
Hot Definitions
  1. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  2. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  3. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  4. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  5. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
  6. Real Rate Of Return

    The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other ...
Trading Center