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. Does my employer's matching contribution count towards the maximum I can contribute ...

    Maximize 401(k) contributions on your own without fear; employer contributions are separate and do not hinder you contributing ...
  2. How much will an employer generally contribute to a 401(a) plan?

    Find out how much employers may contribute to an employee's 401(a) retirement plan and why this amount can vary so widely ...
  3. When can benefits be received from a provident fund?

    Find out when participants in provident funds can begin receiving benefits, including how funds can be used to finance important ...
  4. Is Social Security Income a perpetuity?

    Find out why Social Security income is not classified as a perpetuity, including what constitutes a perpetuity and the basics ...
RELATED TERMS
  1. Qualified Longevity Annuity Contract

    A Qualified Longevity Annuity Contract (QLAC) is a deferred annuity ...
  2. See-Through Trust

    A trust that is treated as the beneficiary of an individual retirement ...
  3. Backdoor Roth IRA

    A method that taxpayers can use to place retirement savings in ...
  4. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  5. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  6. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...

You May Also Like

Related Articles
  1. Retirement

    How to Battle Inflation During Retirement

  2. Retirement

    Does it Make Sense to Have an MLP in ...

  3. Retirement

    Top Tips for Rebalancing 401(k) Assets

  4. Professionals

    Few Target-Date Managers Invest in Their ...

  5. Fundamental Analysis

    Should You Hire an Advisor or DIY Your ...

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!