Canadian citizens holding ROTH IRA's in USA and thinking of returning to Canada in future.

Hi David,

I've been a telephone client of yours in the past and really appreciate your
services. A couple of weeks ago I was listening to a financial talk-radio
show on satellite radio. A caller asked about moving to Canada to retire and
the hosts could not anwer the question. I called to tell them about your
website and they seemed quite pleased to learn about you!

My question is about holding IRA's. My wife and I are both Canadian citizens
with green cards. Been living in the USA since 2001. We both have ROTH IRA's
as well as Simple IRA's through our corporation. We think that we will
likely return to Canada in the future, after we obtain our US citizenships.

When we return to Canada would we be taxed on the internal earnings of our
IRA plans? And when we begin withdrawing from the plans, would Canada tax us
on the ROTH withdrawls?

I also wonder if Canada's tax laws would somehow favour a traditional IRA
over a ROTH becasue it is more like the RRSP.

Thanks David.

david ingram replies:

Someplace, I have a Paul Martin Statement (before he was Prime Minister)
which implies that internal earnings in ROTH IRA accounts will be taxed by
Canadian resident holders.

This does not matter if you return after retirement but does if you come
back at 45 or 50.

Canada would not tax you on withdrawals of the principal part of the ROTH
but would tax you on the interest portion.

Thanks for the comments about the Satellite Radio program. I hope everything
is going okay there and your careers are going well.


Trackback URL for this entry:

No trackback comments for this entry.