RESP while in US - Don Walkow - Darrell Thompson -
Sent: Wednesday, January 24, 2007 5:32 PM
To:
[email protected]
Subject: RESP while in US
I am Canadian citizen
residing (temporarily) in US.
I want to open some college saving fund in
Canada for my Canadian
son, like an RESP.
Trouble is, banks
won't do it because we're not residing in Canada.
I've already given up on
the 20% from the gov., but I would like at
least to avoid paying taxes
on the interest.
What are my options?
Some of the money will be coming
from the grand-parents in Canada, if
that changes anything
Please
advise!
thanks
--------------------------------
david ingram
replies:
The CESG (Canadian Education Savings Grant) is not available to
non-residents.
If you had already received one before leaving Canada
however, it does not have to be repaid.
Assuming that your son already
has his SIN (Social Insurance Number), his grandparents could likely get away
with buying one for him but I don't recommend it anyway.
What you need to
buy (set up) for your son is an "In Trust" account. This means buying him a
growth mutual fund where no interest or dividends are paid. Capital Gains
are not taxable to you under Section 75 of the ITA as interest and dividends
are.
Under US law you have a slightly different set of rules but not
enough to change the concept.
This way, it will be set up for you when
you return to Canada.
The biggest problem is that it is ILLEGAL for 999
out of 1000 US Mutual Fund people to sell you the account when you are living in
the US.
The only two people I know who are licensed to handle such an
account would usually only look after amounts of $50,000 or more and that is
fair because they have gone to immense effort to license themselves for
cross-border US/Canada stock and mutual fund
sales.
-----------------------------------------------
Just in case, you
have another account that you might want to transfer because you have already
found out that no one wants to deal with you, their names and contact info
follows in the Q & A dealing with 401(K) accounts and other things which
might also apply to you when you return to Canada.
[email protected]:
Please see bottom of message if you wish to
unsubscribe.
------------------------------------------
QUESTION:
Hello,
In the US since 2001 and there is a 50-50 chance I will move back
to Canada
in 2007 or beginning of 2008. What should I do with the
following:
1.401K : I have a 50K+. Should I let it grow? Rollover in a
IRA? should I
withdraw when I know for sure that I will move back? (I heard
you can
rollover an IRA or 401K into a RRSP) what are the tax
implications?
2. In the event I move to Canada, can I use my 401k or IRA
toward the
purchase of my first home and not be taxed on my withdrawal.(I
currently
rent in the US and never bought a property in Canada) Will the US
recognize
a property bought in Canada as eligible for the first time home
buyer
program?
3. We wanted to contribute to a Coverdell education
saving account this year
for our first child. Will Canada tax me upon
distribution?
4. Is there a best time to move back to Canada, (late 2007
or beginning of
2008)
Thank you for your
time
----------------------------------------------------
david ingram
replies:
Your 401(K) can be rolled to an IRA. Your IRA can then be
rolled into an
RRSP but the US will not recognize it as a rollover and want
to penalize you
10% for early withdrawal if you have not yet reached the
exalted age of 59
1/2 at the time of withdrawal.
By buying a house,
you can exempt up to $10,000 of the withdrawal from the
10%
penalty.
Rolling it into the RRSP involves reporting the IRA as income on
your
Canadian return and then claiming the deduction for the rollover.
Because
the tax paid to the is a foreign tax credit in Canada, you get to
claim the
tax paid to the USA against other income in
Canada.
Therefore, it is necessary to have significant other income in
Canada for
you to get the equivalent of a tax free rollover. In other
words, do NOT
move to Canada at the end of a year. You should move at
the start of a
year, i.e. Jan 15 to May 15 or so that you can get a lower tax
rate on your
IRA withdrawal in the USA and maximum benefit for the foreign
tax credit in
Canada.
Done properly, and with the RRSP money in the
account long enough in Canada,
you can then withdraw up to $20,000 Canadian
(tax deferred) to use as a down
payment on your Canadian
house.
------
the following previous email talks about it as
well.
QUESTION:
worked in CA for 4 yrs. returned to BC in
Apr.'04. Need to transfer my
retirement fund but having difficulties
with bank and credit union. US
specifies that I must roll it over to
IRA accounts (Individual retirement
account. I do not want to be
subject to the 20% withholding fee for IRS.
What would be the best way to get
the funds to me here in
Canada.
=======================================
david ingram
replies:
1. move it to an IRA and leave it there in one of the
world's strongest
economies. Most financial advisors are trying to get
"more" of their
clients' money into US funds.
2. If
you just have to have it in Canada, you have to cash it in in the
US and pay
your tax to the US. take what is left, add the amount (even
if
borrowed) of the tax you paid to the US and buy your Canadian RRSP.
That
will give you a tax deduction which should be larger than the tax you
paid
to the US.
When you get the refund, pay back the loan. You
will have transferred the
money quite handily.
The amount you took out
is also taxable on your Canadian return. Pay that
tax with the tax you
paid to the US as a foreign tax credit.
You will likely need
help.
Don Walkow of Seabank Capital
Management in Surrey, BC is one Canadian who
can help you
with the process while you are still in the United States.
His
licensing allows him to deal with 401(K) plans, IRA's, RRSP's and
straight
securities in any state in the US - He is one of two people I know
of who
can do this. - His North American telephone number is 1-800-541-9952
and you
can find out more at www.seabankcapital.com.
Darrell Thompson of Blackmont
Securities is the other person and is located
in
Toronto. His phone number is 866-775-7704
If you are in Canada and
in BC in particular, Fred Snyder, host of
"Its Your
Money" every Sunday Morning from 9:00 to 10:30
AM Vancouver Time can also
look after you but can NOT talk to you if you are
in the US. (999 out of
1,000 other Representatives in Canada can NOT talk to
you either). You can
listen to this Canadian Program (I am a guest on
the fourth Sunday of every
month) live at
www.600am.com.
----------------------------------
Answers to this and
other similar questions can be obtained free on Air
every Sunday
morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of
Dundee Wealth
Management and I will be hosting an INFOMERCIAL but LIVE talk
show called
"ITS YOUR MONEY"
Those outside of the Lower Mainland will
be able to listen on the internet
at
www.600AM.com
Local phone
calls to (604) 280-0600 - Long distance calls to 1-866-778-0600.
Old
shows are archived at the site.
This from ask an income tax
immigration planning and bankruptcy expert
consultant guru or preparer
from www.centa.com or www.jurock.com or
www.featureweb.com. Canadian David
Ingram deals daily with tax returns
dealing with expatriate:
multi
jurisdictional cross and trans border expatriate gambling refunds for
the
United States, Canada, Mexico, Great Britain, the United Kingdom,
Kuwait,
Dubai, Saudi Arabia, South Africa, Thailand, Indonesia,
Egypt,
Antarctica, Japan, China, New Zealand, France, Germany, Spain,
Italy,
Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland,
Hawaii,
Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan,
Afghanistan,
Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda,
Barbados, St
Vincent, Grenada,, Virgin Islands, US, UK, GB, American and
Canadian and
Mexican and any of the 43 states with state tax returns,
etc.
income tax wizard wizzard guru advisor advisors experts
specialist
specialists consultants taxmen taxman tax woman
planner planning preparer
of Alaska, Alabama, Arkansas,
Arizona,
California Denver Colorado, Connecticut,
Delaware
District of Columbia Miami Florida,
Garland Georgia, Honolulu
Hawaii, Idaho, Illinois,
Indiana Des Moines
Iowa Kansas Kentucky,
Louisiana Bangor Maine
Maryland
Boston, Massachusetts, Michigan,
Minnesota,
Mississippi, Missouri, Montana,
Nebraska,
Nevada, New Hampshire, New Jersey,
New Mexico, New York,
North Carolina,
North Dakota, Ohio, Oklahoma,
Oregon.
Paris, Rome, Sydney, Australia Hilton
Pennsylvania,
Rhode Island, Rockwall,
South Carolina, South Dakota,
Tennessee,
Texas, Utah, Vermont, Virginia,
West Virginia,
Wisconsin, Wyoming,
British Columbia, Alberta, Saskatchewan,
Manitoba,
Ontario, Quebec City,
New Brunswick, Prince Edward Island,
Nova Scotia,
Newfoundland, Yukon and
Northwest and Nunavit Territories,
Mount Vernon,
Eumenclaw, Coos Bay
and Dallas Houston Rockwall Garland
Texas Taxman
and Tax Guru and wizzard
wizard - David Ingram's US/Canada
Services
US/Canada/Mexico Tax Immigration & working Visa
Specialists
US / Canada Real Estate Specialists
4466 Prospect
Road
North Vancouver, BC, CANADA, V7N 3L7
Calls accepted from 10 AM
to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604)
980-0321
[email protected]
www.centa.com
www.david-ingram.com
Disclaimer: This question has been answered
without detailed information or
consultation and is to be regarded only as
general comment. Nothing in
this message is or should be
construed as advice in any particular
circumstances. No contract exists
between the reader & the author and any
and all non-contractual duties
are expressly denied. All readers should
obtain formal advice from a
competent financial, or real estate planner or
advisor & appropriately
qualified legal practitioner, tax or immigration
specialist in connection
with personal or business affairs such as at
www.centa.com. If you forward
this message, this disclaimer must be
included."
David Ingram
gives expert income tax & immigration help to non-resident Americans &
Canadians from New York to California to Saudi Arabia to Mexico to China or
Chile - Cross border, dual citizen - out of country investments
are all
handled with competence & authority.
New York, Boston, Sacramento,
Minneapolis, Salem, Wheeling, Philadelphia,
Pittsburgh, Atlanta, Pensacola,
Miami, St Petersburg, Naples, Fort Myers,
Cape Coral, Orlando, Atlanta,
Arlington, Washington, Hudson, Green Bay,
Minot, Portland, Seattle, St John,
St John's, Fredericton, Quebec, Moncton,
Truro, Atlanta, Charleston, San
Francisco, Los Angeles, San Diego,
Sacramento, Taos, Grand Canyon, Reno, Las
Vegas, Phoenix, Sun City, Tulsa,
Monteray, Carmel, Morgantown, Bemidji,
Sandpointe, Pocatello, Bellingham,
Custer, Grand Forks, Lead, Rapid City,
Mitchell, Kansas City, Lawrence,
Houston, Albany, Framingham, Cambridge,
London, Paris, Prince George, Prince
Rupert, Whitehorse, Anchorage,
Fairbanks, Frankfurt, The Hague, Lisbon,
Madrid, Atlanta, Myrtle Beach, Key
West, Cape Coral, Fort Meyers, Berlin,
Hamburg
Warsaw,
Auckland, Wellington, Honolulu, Maui, Kuwait, Molokai, Beijing,
Shanghai,
Tokyo, Manilla, Kent, Winnipeg, Saskatoon, Regina, Red Deer, Olds,
Medicine
Hat, Lethbridge, Moose Jaw, Brandon, Portage La Prairie, Davidson,
Craik,
Edmonton, Calgary, Victoria, Vancouver, Burnaby, Surrey, Edinburgh,
Dublin,
Belfast, Glasgow, Copenhagen, Oslo, Munich, Sydney, Nanaimo,
Brisbane,
Melbourne, Darwin, Perth, Athens, Rome, Berne, Zurich, Kyoto,
Nanking, Rio De
Janeiro, Brasilia, Colombo, Buenos Aries, Squamish,
Churchill, Lima,
Santiago, Abbotsford, Cologne, Yorkshire, Hope, Penticton,
Kelowna, Vernon,
Fort MacLeod, Deer Lodge, Springfield, St Louis, Centralia,
Bradford,
Stratford on Avon, Niagara Falls, Atlin, Fort Nelson, Fort St
James, Red
Deer, Drumheller, Fortune, Red Bank, Marystown, Cape Spears,
Truro,
Charlottetown, Summerside, Niagara Falls, Albany Zimbabwe
international
non-resident cross border income tax help assistance expert
preparation &
immigration consultant david ingram, experts on rentals mutual
funds RRSP
RESP IRA 401(K) & divorce preparer preparers consultants
This
from "ask an income tax and immigration expert" from
www.centa.com
<http://www.centa.com/> or www.jurock.com
<http://www.jurock.com/>
or
www.featureweb.com <http://www.featureweb.com/> . David Ingram deals on a
daily basis with expatriate tax returns
with:
multi jurisdictional cross and trans border expatriate problems
for the
United States, Canada, Mexico, Great Britain, United Kingdom, Kuwait,
Dubai,
Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand,
France,
Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador,
Bolivia,
Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq,
Iran,
India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland,
Cuba,
Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US,
UK,
GB, and any of the 43 states with state tax returns, etc. Rockwall,
Dallas,
San Antonio Houston
Denmark, Finland, Sweden Norway Bulgaria
Croatia Income Tax and Immigration
Tips, Income Tax Immigration Wizard
Antarctica Rwanda Guru Consultant
Specialist Section 216(4) 216(1) NR6
NR-6 NR 6 Non-Resident Real Estate tax
specialist expert preparer expatriate
anti money laundering money seasoning
FINTRAC E677 E667 105 106 TDF-90
Reporting $10,000 cross border transactions
Grand Cayman Aruba Zimbabwe South
Africa Namibia help USA US
David Ingram expert income tax help and
preparation of US Canada Mexico
non-resident and cross border returns with
rental dividend wages
self-employed and royalty foreign tax
credits
Alaska, Alabama, Arkansas,
Arizona,
California, Colorado, Connecticut,
Delaware, District of
Columbia, Florida,
Garland, Georgia, Hawaii, Idaho,
Illinois,
Indiana, Iowa, Kansas,
Kentucky,
Louisiana, Maine, Maryland,
Massachusetts, Michigan,
Minnesota,
Mississippi, Missouri, Montana,
Nebraska,
Nevada, New Hampshire, New Jersey,
New Mexico, New York,
North Carolina,
North Dakota, Ohio, Oklahoma,
Oregon.
Pennsylvania, Rhode Island, Rockwall,
South Carolina,
South Dakota, Tennessee,
Texas, Utah, Vermont, Virginia,
West
Virginia, Wisconsin, Wyoming,
British Columbia, Alberta,
Saskatchewan,
Manitoba, Ontario, Quebec City,
New Brunswick, Prince Edward
Island,
Nova Scotia, Newfoundland, Yukon and
Northwest and Nunavit
Territories,
Mount Vernon, Eumenclaw, Coos Bay
and Dallas Houston Rockwall
Garland
Texas Taxman and Tax Guru and wizzard
wizard -
consultant - expert - advisor -advisors consultants - gurus - Paris
Prague
Moscow Berlin
Lima Rio de Janeiro, Santaigo
Zimbabwe
Comments (0)
CEN-TA Cross Border Services - Tax, Visas, Immigration
http://www.centa.com/article.php/UsCaWeekofMon20070122003088.html