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. 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 >>
  2. Upon my death, will the beneficiaries of my IRA be compelled to take the entire amount ...

    It depends. If the beneficiary of your IRA is your spouse, he or she will be eligible to transfer the amount to his or her ... Read Answer >>
  3. 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    Any amounts withdrawn from your 401(k) plan must be treated as ordinary income for the year the amount is distributed from ...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 >>
  4. If I am entitled according to my divorce decree to a percentage of my ex-husband's ...

    In order to have your portion of the IRA assets transferred to you (i.e. into your name), you should contact your husband's ... 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

    Avoid the Most Common IRA Rollover Mistakes

    Avoid paying excess taxes by learning some simple transfer rules.
  3. 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.
  4. Retirement

    Worst IRA Mistakes You Can Make

    Here are some costly mistakes that you should avoid with your individual retirement account.
  5. Financial Advisor

    Best Ways to Roll Over Your 401(k)

    When you leave a job, you have some decisions to make about what to do with your 401(k). Here are some choices.
  6. Investing

    Avoid These Common IRA Rollover Mistakes

    Rolling over an IRA can lead to higher returns and other perks; but avoid these common mistakes.
  7. Retirement

    Should You Roll Over Your 401(k)?

    Before moving your retirement funds into another account, consider your options.
  8. Investing

    Understanding the Benefits of Rollover IRAs

    Need help deciding what to do with your 401(k) plan from a former employer? Here are your options.
  9. Tech

    How to Choose the Best IRA Custodian

    Finding the right custodian for your IRA means determining the sort of IRA you want. Then you can zero in on the ideal institution for the job.
  10. Retirement

    Avoid Taxes on IRA Rollovers

    For years, IRA owners have been allowed to roll over their money from one IRA to another once a year without penalty, for each IRA account they had. A tax court ruling in January 2014 has brought ...
RELATED TERMS
  1. Rollover IRA

    A special type of traditional individual retirement account into ...
  2. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  3. IRA Plan

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

    The transfer of funds from an Individual Retirement Account (IRA) ...
  5. Foreign Plan

    A retirement savings plan created by a person or a company to ...
  6. IRS Publication 515

    A document published by the Internal Revenue Service that provides ...
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment is made with the expectation of earning a return on it. This ...
  3. Treynor Ratio

    A ratio developed by Jack Treynor that measures returns earned in excess of that which could have been earned on a riskless ...
  4. Buyback

    The repurchase of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies ...
  5. Tax Refund

    A tax refund is a refund on taxes paid to an individual or household when the actual tax liability is less than the amount ...
  6. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced within a country's borders in a specific time period, ...
Trading Center