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 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 >>
  2. 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 >>
  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    Any amounts withdrawn from your 401(k) plan must be treated as ordinary income for the year the amount is distributed from ...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. I am only 17 years old. I don't have a job or pay taxes. Can I contribute to an IRA? ...

    You must have earned income (eligible compensation) to be eligible to contribute to a Roth IRA. Individuals who are eligible ... Read Answer >>
  5. Can variable annuities be rolled into an IRA?

    Variable annuities are popular in many government retirement plans. But are they transferable to the employee's IRA upon ... Read Answer >>
  6. Can I roll over the 401(k) money from my old job into my new company's plan?

    Roll over your old 401(k) to your new employer's 401(k) or other retirement plan. Check with your new plan to ensure eligibility. ... Read Answer >>
Related Articles
  1. Taxes

    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. Taxes

    Unexpected 1099-R Form: What To Do

    Did your IRA custodian report distributions you thought were non-reportable? Find out what went wrong.
  4. 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.
  5. Retirement

    No Need To Rush End-Of-Career Retirement Planning

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

    Should You Roll Over Your 401(k)?

    Before moving your retirement funds into another account, consider your options.
  7. 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 ...
  8. Retirement

    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.
  9. Financial Advisors

    IRA Holders Face New Rules in 2015

    New rules for IRA holders mean less loopholes in 2015.
  10. Investing

    Advising FAs: Explaining Estate Planning to a Client

    As the old saying goes, you can't take it with you. For this reason, it is important to have a current estate plan in place to protect your family and belongings.
RELATED TERMS
  1. Eligible Rollover Distribution

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

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

    The transfer of funds from an Individual Retirement Account (IRA) ...
  4. Individual Retirement Account - IRA

    An investing tool used by individuals to earn and earmark funds ...
  5. Foreign Plan

    A retirement savings plan created by a person or a company to ...
  6. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...
Trading Center