Inverted snowbird
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Thread: Inverted snowbird

  1. #1
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    Inverted snowbird

    Hi all,

    I'm an US citizen, living in Canada. I'm getting paid by an US company in USD. That doesn't make me a snowbird, but some kind of inverted snowbird, is there a name for me?

    Anyways, I'm trying to plan for retirement, and I'm likely going to stay in Canada (working on my path towards citizenship). It is hard to say if I will be here when I retire, which sometime from now still (I'm 41).

    I pay Canadian federal and provincial taxes (and tax treaty away the US taxes). For the past several years I've been just getting my USD paycheck, and depositing it in my bank account and getting it converted into CAD. I started to realize that this was dumb, because I could get better exchange rates if I opened a USD bank account and converted the money via Norbert's Gambit. I haven't quite figured out how to get that USD into my BMO Investorline account yet, but until then I've been using knightsbridgefx to convert the money to get a better exchange. In the process of getting my investment account setup, I figured I would do a little investment for retirement, and start a RRSP. I found out quickly that as a US citizen I should avoid TFSAs, and then learned about the PFIC restriction for US citizens which means that I should *not* own any Canadian ETFs unless they are in a RRSP. As you can see, I'm slowly learning to navigate the different pitfalls.

    I've paid off all my debts, and now have a good stash of emergency savings, and now its time to properly plan for retirement, which I haven't been doing for a while, so I'm trying to fix that now.

    I've got an IRA in the US at Fidelity that I contributed to some years ago, and then stopped. Now I'm wondering if I should just keep working my retirement in that IRA, instead of opening a RRSP? It seems to me another dumb move for me to convert my money into CAD, then put it into a RRSP for retirement, when I could just put that money directly as USD into an IRA. Or is there something I'm not thinking of? Obviously there are differences between what you can do with an IRA and what you can do with a RRSP....but I'm wondering if I can deduct my IRA contributions from my Canadian taxes, like I would with a RRSP, or if I would deduct that from the US filings (and then get a refund?) Or are there other complications that I should be concerned about down the line? Or is there a better way for me to do this?

    Any suggestions or ideas you have would be super helpful, I've tried to find information online about this, but it seems there is not so much information about my situation!


  2. #2
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    I am certainly not an expert on some of the finer points you mention regarding your right to rrsp or whether you should use it if you have the right, etc. My immediate thought was what you mentionned, what is called Norbert<s Gambit for converting fairly large amounts of money. I am sure you can easily get both us and canadian currency accounts with any of the major brokers. i know I do. Another possibility, if you want to or have to keep everything in the IRA, yet have to live in Canadian dollars, is to buy jointly listed stocks. You can, for instance, easily buy companies like CP and CN, and many more in American dollars. You will still have to live with some currency risk but these companies will at least be dependent upon the Canadian economy, which may turn out good or bad, but it is where you will be living, and you can sell them immediatly in Canadian dollars whenever you want. just a couple of thoughts which might be helpful
    joe

  3. #3
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    You may wish to consider this forum
    https://forums.serbinski.com

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    I honestly know very little of your tax situation and whether the IRA or RRSP makes more financial sense. However, you seem to indicate that you need to convert to CAD to put into a RRSP - you can directly deposit USD into a RRSP at most financial institutions in Canada.

  6. #5
    Senior Member humble_pie's Avatar
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    Quote Originally Posted by lipsync View Post
    Hi all,

    I'm an US citizen, living in Canada. I'm getting paid by an US company in USD ... For the past several years I've been just getting my USD paycheck, and depositing it in my bank account and getting it converted into CAD. I started to realize that this was dumb, because I could get better exchange rates if I opened a USD bank account and converted the money via Norbert's Gambit. I haven't quite figured out how to get that USD into my BMO Investorline account yet, but until then I've been using knightsbridgefx to convert the money to get a better exchange.


    knightsbridge was a good choice for efficient FX conversion at what are said to be low competitive knightsbridge fees.

    interestingly, though, you are a poster child for how-to-gambit-curencies-perfectly. You already have a BMO investorline account? great, this is one of the only 2 brokers in canada that work currency gambits online, instantly & cheaply.

    you'd just deposit your US pay cheque directly into your BOMIL account. Surely they gave you a USD bank account inked to your Investorline account, with its own USD chequebook? the BOMIL account number will be the same for both the CAD & the USD side.

    for USD deposits, i believe one still has to visit a teller in a branch. It's also possible that, if your pay cheque is drawn on a US domestic bank, BMO might put a hold as long as 30 days on said cheque. However, these little drawbacks won't be the end of the world.

    if you haven't yet opened the USD side of your BOMIL account, perhaps you could do so? after that, all will be a breeze. You'll be able to deposit USD as is. No conversion necessary. From there, you can invest in US securities, or even canadian interlisted stocks that trade in US markets (although there are caveats with interlisted securities, usually involving their dividends, more details later if things ever reach this point.) You'll also be able to write cheques in US dollars.

    in addition, from such a USD base camp in BOMIL US account, you can gambit easily into CAD. From there you can purchase canadian securities on the toronto stock exchange.

    i for one do like joe's suggestion just upthread, where he mentions that interlisted canadian stocks might particularly appeal to you, since you can buy & sell these in either currency without additional FX fees. Tailor-made for a 41-year-old who wants to keep all his options for future residence in either canada or the US, flexible & open.

    .
    ''bonté gracieuse et toute cette sorte de chose" - Astérix chez les bretons]

  7. #6
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    Quote Originally Posted by lipsync View Post
    ... For the past several years I've been just getting my USD paycheck, and depositing it in my bank account and getting it converted into CAD. I started to realize that this was dumb, because I could get better exchange rates if I opened a USD bank account and converted the money via Norbert's Gambit.

    I haven't quite figured out how to get that USD into my BMO Investorline account yet ...
    Is BMO the best brokerage for gambits?
    If so, then I suspect one can get some ideas by calling the BMO reps.
    If not, perhaps a better starting point which broker will make it easier.

    You mention the possibility of holding an RRSP so that may make one broker a better choice than another as USD RRSPs with the ability to easily gambit seem to be improving but not common to all brokerage accounts.


    Quote Originally Posted by lipsync View Post
    ... I've got an IRA in the US at Fidelity that I contributed to some years ago, and then stopped. Now I'm wondering if I should just keep working my retirement in that IRA, instead of opening a RRSP?

    It seems to me another dumb move for me to convert my money into CAD, then put it into a RRSP for retirement, when I could just put that money directly as USD into an IRA. Or is there something I'm not thinking of?
    The first thing that comes to mind that you may be overlooking is that some broker have USD RRSPs. This means that as long as you have the USD in the first place, it can be deposited to the USD RRSP without two currency conversions.


    The second thing is that while I'm not sure of the finer points of an IRA versus an RRSP, I wonder if the tax deduction the IRA would give on the US taxes would be lower than the RRSP tax deduction. It may make the RRSP more attractive but is only one factor to consider.


    Cheers



    Obviously there are differences between what you can do with an IRA and what you can do with a RRSP....but I'm wondering if I can deduct my IRA contributions from my Canadian taxes, like I would with a RRSP, or if I would deduct that from the US filings (and then get a refund?) Or are there other complications that I should be concerned about down the line? Or is there a better way for me to do this?

    Any suggestions or ideas you have would be super helpful, I've tried to find information online about this, but it seems there is not so much information about my situation![/QUOTE]

  8. #7
    Senior Member humble_pie's Avatar
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    Quote Originally Posted by Eclectic12 View Post
    1) Is BMO the best brokerage for gambits?

    2) If so, then I suspect one can get some ideas by calling the BMO reps.

    3) If not, perhaps a better starting point which broker will make it easier.

    You mention the possibility of holding an RRSP so that may make one broker a better choice than another as USD RRSPs with the ability to easily gambit seem to be improving but not common to all brokerage accounts.


    1) yes, BMO & royal bank are the 2 best canadian discount brokers for currency gambit purposes. This point has been clarified by numerous cmf posters over a number of years.


    2) one has to remember that, at both BMO & roybank, gambit trades are carried out instantly & 100% online. Unlike all other brokers, bmo & ry clients never need to phone a licensed rep.

    the result is that some BMO reps happen to be familiar with gambit trades while many others have never heard of them. These latter representatives will not be able to help any client.

    in this instance, the OP has said he already has a BOMIL account. He's already perfectly set up to direct deposit his USD paycheques & carry on from there.


    3) ability to gambit currencies is not actually going to "improve," given the sophistication of the concept & the limitations of the mainframe systems in use at the various brokers. Other than BMO & roybank, each broker is handicapped in some fashion.

    one has to remember that it is not in brokers' interests to facilitate gambit trading. Brokers would much prefer to earn their 2% profit by charging FX fees.

    on the other hand, currency gambit trading is nothing more than plain old-fashioned arbitrage, which has been lawfully going on for centuries. Brokers cannot legally stop arbitrage trades.

    .
    ''bonté gracieuse et toute cette sorte de chose" - Astérix chez les bretons]

  9. #8
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    Quote Originally Posted by humble_pie View Post
    knightsbridge was a good choice for efficient FX conversion at what are said to be low competitive knightsbridge fees.
    Yes, I used them once, it worked out well. I have to say I was a bit nervous about it at first, but did a bunch of research first and it was fine.

    Quote Originally Posted by humble_pie View Post
    interestingly, though, you are a poster child for how-to-gambit-curencies-perfectly. You already have a BMO investorline account? great, this is one of the only 2 brokers in canada that work currency gambits online, instantly & cheaply.

    you'd just deposit your US pay cheque directly into your BOMIL account. Surely they gave you a USD bank account inked to your Investorline account, with its own USD chequebook? the BOMIL account number will be the same for both the CAD & the USD side.
    I actually opened the BOMIL account because I read about this Gambit thing and then opened a VirtualBrokers account to do it, then I found out it wasn't going to be that easy so I went over to QuestTrade and then I finally found this forum and found out that I should be at BMOIL... it literally took two months to get that account "approved" by them, I dont know why it took so long. Anyways, now it is setup.

    I only got a BOMIL account when I opened it, I did not get a USD bank account, or even a CAD bank account. I tried to go in to talk to someone about it, and they seemed to think it was not possible. However, my experience with BMO has been terrible. When I went to open the BMOIL account, I gathered all the required documents and then had to go to a branch four different times because the people there kept thinking they knew better than the BMOIL account setup requirements page and didn't't bother to submit some of my proofs of identity because they didn't think it was necessary. So I dont know if what this person told me is true, or if there is a better way to get actually useful information in a reasonable amount of time somehow out of them, if there is I haven't found it yet. So the fact that its "not possible" to transfer USD into BMOIL is considered by me as "Alternative Facts" until I can find the real truth. I know people love BMOIL here because of the Norbert's Gambit ease, but holy moley chipotle their customer service is almost impossible to get worse.

    Quote Originally Posted by humble_pie View Post
    for USD deposits, i believe one still has to visit a teller in a branch. It's also possible that, if your pay cheque is drawn on a US domestic bank, BMO might put a hold as long as 30 days on said cheque. However, these little drawbacks won't be the end of the world.
    This is likely to be true. I have to wait this long for similar service with Desjardins or Tangerine (although sometimes it can be 14 days only).

    Quote Originally Posted by humble_pie View Post
    if you haven't yet opened the USD side of your BOMIL account, perhaps you could do so? after that, all will be a breeze.
    I'll try again...

  10. #9
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    Quote Originally Posted by EngPhysGuy View Post
    I honestly know very little of your tax situation and whether the IRA or RRSP makes more financial sense. However, you seem to indicate that you need to convert to CAD to put into a RRSP - you can directly deposit USD into a RRSP at most financial institutions in Canada.
    THANKS! I had no idea I could do that!

  11. #10
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    Quote Originally Posted by lipsync View Post
    I actually opened the BOMIL account because I read about this Gambit thing and then opened a VirtualBrokers account to do it, then I found out it wasn't going to be that easy so I went over to QuestTrade and then I finally found this forum and found out that I should be at BMOIL... it literally took two months to get that account "approved" by them, I dont know why it took so long. Anyways, now it is setup.

    I only got a BOMIL account when I opened it, I did not get a USD bank account, or even a CAD bank account. I tried to go in to talk to someone about it, and they seemed to think it was not possible. However, my experience with BMO has been terrible. When I went to open the BMOIL account, I gathered all the required documents and then had to go to a branch four different times because the people there kept thinking they knew better than the BMOIL account setup requirements page and didn't't bother to submit some of my proofs of identity because they didn't think it was necessary. So I dont know if what this person told me is true, or if there is a better way to get actually useful information in a reasonable amount of time somehow out of them, if there is I haven't found it yet. So the fact that its "not possible" to transfer USD into BMOIL is considered by me as "Alternative Facts" until I can find the real truth. I know people love BMOIL here because of the Norbert's Gambit ease, but holy moley chipotle their customer service is almost impossible to get worse.
    You mentioned you have Questrade and Tangerine.. Tangerine can give you a free USD savings acct and it can be linked to Questrade RRSP. It's a bit of a hassle to setup the first time but after the accts are linked you can easily pull USD from Tangerine direct to Questrade. Questrade also gives you the spot rate on the contribution slip for CRA unlike some big banks

    I had a BMOIL before Questrade and I had TD while living abroad. TD (and I imagine all B&M banks) is impossible to deal with from abroad (just come on into our antiquated branch that is only located in Canada and then we'll do that simple task for you, sir!) Tangerine and Questrade you can do everything from abroad, with no hidden slippage on every single little FX transaction

    BMOIL can do instant Norbit's Gambit though whereas Questrade I have to open a chat window for 30 seconds to request the shares be journaled over and it takes a few days to clear (3 days I think?) If you're doing Norbit's Gambit a lot this might be an issue for using Questrade. I find it worthwhile to avoid lineups of senior citizens and rookie tellers at the B&Ms

    Amat Victoria Curam

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