Cashing in Canadian RRSP by California resident Ask a

I currently have a Canadian RRSP account that I would like to transfer
to the US. I was transferred by my company to California, and at that
time I had the option to move the RRSP at a withholding rate of 25%.
It has been almost 5 years now, and I would like to move the money to
the US and invest it.
What is the process, and what are my taxation concerns in both
countries. Is there a benefit to leaving it or moving it? Is there a
max or minimum amount to move?
Thank you.
 david ingram replies:
When you cash in a Canadian RRSP as a non-resident the Canadian
Withholding is a flat 25%.  You do not have to file a Canadian Tax
return although if you were only cashing in $10,000 and had no other
income that year, you could file a Section 217 Canadian return and get
some of the tax back.
For US purposes, you have to look at the value of the RRSP the day you
left Canada.  Only the gain from when you left to when you cash it,
is taxable in the USA.
So if you cashed in $100,000 and had $25,000 withheld and it was worth
$90,000 the day you moved to the USA, your earnings would be $10,000
and the tax withheld would be $2,500.  You would then report the
$10,000 (converted to US dollars) on Schedule B (assuming interest or
dividends) and  Schedule D if it was a capital gain. The $2,500
(converted to US dollars) would be claimed as a foreign tax credit.
Should you move??  What a question?  If you do NOT have a use for the
money, I would leave it in Canada.  You said you have been gone five
years.  If you had taken it out of Canada in March 2000 and were
looking at its worth today, you would likely have a heart attack
because on average you would have lost 30% in exchange and the US
market has not performed at all well in relation to Canada.  My bet is
that you have 50% more for having left it in Canada.
>From your email address and the fact that we looked after your return
last year, I know that "YOU" understand all to well what has happened
to Canadian Exports to the USA because of the drop in value of the
American Greenback.
I am one of the people who feels that the Canadian dollar will
continue to rise (to our detriment with regard to International trade)
and come close to par again.  But if I am wrong and the American
Market takes off, you will shoot me.
So play it by ear.  Take half to the US and leave half in Canada. That
hedges your bet.
 I also recommend, (if he will accept a new account) that you move
your account to a fellow I have never met named Shaun Rickerby, a
broker with TD Investments in Richmond.  Shaun is one of about 16
people in all of Canada who has made the effort to be licenced to deal
with Canadians in about 43 states.
You can get hold of Shaun at shaun.rickerby at  his phone number
is 604 482-5188
Hope this helps.  I will be glad to look after your returns as you
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