A:

No, a U.S. resident should not contribute to a RRSP account. RRSP contribution rules allow you to contribute a certain percentage of your earned income, but since your income is not from a Canadian source, you would not be eligible for any tax deductions in Canada.

However, even though you are not eligible to contribute to your RRSP, you are still allowed to keep your RRSP to let your investments grow without being subject to tax in Canada. As a U.S. resident, you can elect to defer income generated from your investments in your RRSP until it is withdrawn by filling out Form 8891 each year with your tax return.

In addition, if you are emigrating from Canada, you should maximize your contribution in the year that you leave Canada. The government gives you 60 days after year-end to make this contribution. Also, it is important to note that if you have taken any money out of your RRSP under the Home Buyer's Plan (HBP) or other plans, you should arrange to repay the amount before becoming a non-resident. Otherwise, that outstanding amount may be subject to income tax for the year of emigration. (To learn more about the retirement planning process, read Retirement Planning.)

If you do plan on staying in the U.S. for an extended period, you may want to look into opening an individual retirement account (IRA). You will be allowed to open an IRA in the U.S., as long as you are a legal U.S. resident with a valid social security number. This will allow you to defer taxes on contributions you make from income earned in the U.S. (For more information on choosing the right IRA, take a look at our article, Which Retirement Plan Is Best?)

RELATED FAQS
  1. Is a Registered Retirement Savings Plan (RRSP) taxable in the U.S.?

    Learn how the IRS treats Canadian Registered Retirement Savings Plans that are held by U.S. citizens or residents, and discover ... Read Answer >>
  2. What are the main reasons to obtain a Registered Retirement Savings Plan (RRSP)?

    Learn about some of the major benefits of opening and contributing to a Registered Retirement Savings Plan throughout your ... Read Answer >>
  3. What are the main reasons not to get a Registered Retirement Savings Plan (RRSP)?

    Find out some of the reasons why you might want to reconsider opening up a Registered Retirement Savings Plan and instead ... Read Answer >>
  4. How does a Registered Retirement Savings Plan (RRSP) loan work?

    Discover some of the most common and useful ways to take out a loan from your Registered Retirement Savings Plan without ... Read Answer >>
  5. What should you consider before taking a loan on your Registered Retirement Savings ...

    Learn about the primary factors you should consider before deciding to take out a loan from your Registered Retirement Savings ... Read Answer >>
  6. What are the penalties for early withdrawal from a Registered Retirement Savings ...

    Learn about the three major penalties associated with making an early withdraw from your Registered Retirement Savings Plan ... Read Answer >>
Related Articles
  1. Taxes

    RRSPs: The Benefits

    What an RRSP Is A Registered Retirement Savings Plan, or RRSP, is a special type of investment account designed to help Canadians save for retirement. The main advantage of an RRSP account, as ...
  2. Taxes

    RRSPs: Registered Plan Strategies

    Accumulating enough money to live on once your working years are over is no easy task. However, you can use certain strategies to help increase the effectiveness of your RRSP as a retirement-saving ...
  3. Retirement

    Maxing Out Your RRSP (Canadian)

    Increasing your savings will provide tax benefits - and peace of mind.
  4. Taxes

    RRSPs: Conclusion

    If you're a young investor, retirement may seem like it's a long way off, but we hope that this tutorial has encouraged you to think about planning ahead. After all, starting at a young age is ...
  5. Taxes

    RRSPs: Withdrawals

    By now, you should have a pretty good idea of how to put your money into an RRSP and what happens to it while it's there. But an important questions remains: How the heck do you get money out? ...
  6. Taxes

    RRSPs: Investment Eligibility

    What Investments Are Allowed? For the average person, most investments can be held in an RRSP. However, the government doesn't let every investment sit under the tax-sheltered, tax-deferred umbrella ...
  7. Taxes

    RRSPs: Introduction

    This tutorial is your one-stop RRSP shop. Here we explore the ins and outs of RRSP planning and investing. Specifically, we look at what an RRSP is, what its advantages are, how you can set one ...
  8. Taxes

    RRSPs: Eligibility

    Who Can Set Up an RRSP? After reading about the tax advantages of RRSPs in the previous section, you may be anxious to know whether you're eligible to invest. The good news is that practically ...
  9. Taxes

    RRSPs: Contributing - Part 1

    Contribution Limits Because of the tax benefits provided by RRSPs, the Canadian government has capped the amount of money that can be contributed. (Note: the contribution limit is sometimes called ...
  10. Taxes

    RRSPs: Growth

    The growth of an RRSP is determined by its contents. Simply having money in an RRSP is not a guarantee that you may retire comfortably; however, it is a guarantee that the investments will compound ...
RELATED TERMS
  1. Registered Retirement Savings Plan Contribution - RRSP Contribution

    Assets invested in an RRSP. RRSP contributions can be made at ...
  2. Self-Directed RRSP

    A type of RRSP (Registered Retirement Savings Plan) whose owner ...
  3. Registered Retirement Savings Plan - RRSP

    A legal trust registered with the Canada Revenue Agency and used ...
  4. Registered Retirement Savings Plan Deduction - RRSP Deduction

    The amount that a Canadian taxpayer contributes to his or her ...
  5. Registered Retirement Savings Plan Deduction Limit - RRSP Deduction Limit

    The maximum amount that the Canada Revenue Agency (CRA) allows ...
  6. Pension Adjustment - PA

    The amount of contributions that can be made to a Registered ...

You May Also Like

Trading Center