Can I roll over my IRA assets to a sheltered Canadian plan?

By Denise Appleby AAA
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. What are the 403(b) contribution limits?

    Determine whether 403(b) contributions meet federal guidelines. Contribution limits to this retirement plan are determined ...
  2. Can I roll over a 403b plan?

    Learn whether distributions from a 403(b) plan can be rolled over, where they can be rolled over to and what the income tax ...
  3. What is the difference between a 408 (k) plan and a 401 (k) plan?

    Learn key differences between 401(k) and 408(k) plans. Employers provide different options to help employees save for retirement, ...
  4. Is a 408 (k) the same as a Simplified Employee Pension (SEP)?

    Find out the differences and the similarities between a 408(k) retirement plan and a simplified employee pension (SEP), and ...
RELATED TERMS
  1. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  2. Abbreviated New Drug Submission (ANDS)

    A written request to Health Canada to obtain marketing approval ...
  3. Gold IRA

    Definition of Gold IRA
  4. Keystone XL Pipeline

    A proposed extension of the Keystone pipeline system that is ...
  5. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  6. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...
comments powered by Disqus
Related Articles
  1. When Your Job Offers An Awful Retirement ...
    Retirement

    When Your Job Offers An Awful Retirement ...

  2. Top 5 Strategies To Pay For Elder Care
    Retirement

    Top 5 Strategies To Pay For Elder Care

  3. 10 Common Retirement Planning Mistakes ...
    Retirement

    10 Common Retirement Planning Mistakes ...

  4. Power Of Attorney: Do You Need One?
    Retirement

    Power Of Attorney: Do You Need One?

  5. 7 Steps To Evaluate A Financial Adviser
    Investing Basics

    7 Steps To Evaluate A Financial Adviser

Trading Center