# Bringing American 401(k) to Canada



## james4beach (Nov 15, 2012)

Does anyone here have experiencing bringing an American 401(k) retirement plan back to Canada? If so, can you share your experience, or any advice?

I currently work in the US. After working a few years, I (eventually) plan to take the money out of the 401(k). The main reason is that I want to free myself from all the US tax messes, and I'm willing to take a penalty to bring the money to Canada. Additionally, many American plans don't allow non-residents to stay in the plan, so I may be forced to do this whether I want to or not.

I don't want to convert it to an IRA to leave in the US forever... I really just want to bring the money to Canada.


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## Eclectic12 (Oct 20, 2010)

No experience ... but as I would expect, this article says it needs planning.
http://www.advisor.ca/tax/tax-news/how-to-bring-401ks-and-iras-to-canada-211471

I would hope you get some qualified advice.
http://www.moneysense.ca/save/taxes/should-i-transfer-401k-into-canada/
https://www.worldatwork.org/waw/canadanews/html/canv11n2-3.html
http://www.canadianexpatnetwork.com/public/1237.cfm
http://capitaltaxltd.com/canada/201...-with-their-u-s-retirement-plan-401-k-or-ira/


Hopefully someone with experience can add more value.


Cheers


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## james4beach (Nov 15, 2012)

Thanks for the links. Yes, it looks complicated. The good news is one of the people cited in those articles is actually my accountant 

Looks like I'd better set up a meeting.


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## gibor365 (Apr 1, 2011)

> all the US tax messes


 The mess is everywhere (this mess was one of the reason that we rejected reallocation offer to US), sometimes I wonder if it wasn't created on purpose?!

And how nice was to move from Israel .... no tax - not on pension money, not on professional fund (cannot exacty translate- no such thing here), not on interest ... just went to bank and 5 min later got out with bag full of cash


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> Thanks for the links. Yes, it looks complicated. The good news is one of the people cited in those articles is actually my accountant


Hopefully this means your accountant is an expert.

From a different thread about moving an Aussie superannuation pension, this article covers similar ground.
http://www.advisor.ca/retirement/retirement-news/how-to-bring-global-pensions-home-231756


It seems having Canadian income sufficient to help with the FTC is an important part. 

The good news is that as you aren't a US citizen, which is what is reported in the Go Public article as being the issue for the couple profiled.


Cheers


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## james4beach (Nov 15, 2012)

Thanks Eclectic12. I've previously gotten some solid US/Canada advice from them. It looks like I had better start these discussions soon, so I can start planning.

Yes very thankful I am not a US citizen or green card holder. Once I return to Canada and liquidate my US accounts, I should no longer have any US tax concerns.


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## Eclectic12 (Oct 20, 2010)

Is there something driving the timing?


Just curious ...


Cheers


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## james4beach (Nov 15, 2012)

I'm not cashing out the 401(k) yet. The timing of this question has to do with the size of my 401(k). When it was tiny it didn't matter one way or another. Now that it's approaching 40K, it's large enough that significant tax things are going to happen.

I've also been thinking about the T1135 and the 100K threshold. I've googled around, but can't figure out if the value of the 401(k) should be included when calculating if I'm over 100K.


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## Eclectic12 (Oct 20, 2010)

Not sure what Google search terms you used ... first try for me using "what foreign assets require a T1135" had a CRA link first that was more about the mechanics then the second link was an Advisor article.



> A T1135 must be filed by: Canadian resident individuals, corporations and trusts that, at any time during the year, own specified foreign property costing more than $100,000 ...
> *Specified Foreign Property does not include:
> - Assets held in a foreign registered pension account (IRA, 401K)*


http://www.advisor.ca/tax/tax-news/understanding-the-new-t1135-151683

Of course I'd check this when asking about the 401k to RRSP transfer.


As per the MoneySense article link from above, planning is required as employer contributions don't get a tax free rollover ... which is what brings into the play the need for RRSP contribution room. Possibly more importantly, there is mention in the same article that collapsing a 401k when one is too young means US tax implications.


Cheers


*PS*

Based on the articles, it would seem a Roth IRA is not considered a foreign pension account by the Canada-US tax treaty, just like a TFSA is not a foreign pension account.


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## fplan (Feb 20, 2014)

Based on my knowledge: you can keep your 401k in corporate plan but you are not allowed to change your allocations..you can update your address in canada..thats how plan providers know you are out of us..there is no automatic transfer of funds from 401k to rrsp.. you have to withdraw from 401k and contribute into rrsp..

Withdrawal from 401k will trigger 10% penalty , if you are not 60yrs old.. 

Retirement plans (rrsp , 401k , similar plans from other countries ) are exempt from many tax requirements...


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## james4beach (Nov 15, 2012)

I am happy to take the 10% penalty. I just want the money out of the USA so I can stop interacting with their institutions.

Clarification: for if/when I eventually return to Canada


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