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Contribution to Roth IRA

M

mayple

Star Member
Dec 30, 2017
195
56
Can those who are Canadian residents for tax purposes but employed in the US contribute to Roth IRA? I read online suggestions to stop contributing to Roth IRA after becoming Canadian resident (the article did not state whether they were referring to Canadian resident for tax purposes or Canadian resident from an immigration standpoint), otherwise Roth IRA "earnings" will be taxable in Canada (even if not taxable in the US).

Secondly, can you maintain 401k in the US (assuming continued employment with the US as a cross-border worker for example) despite being a Canadian tax resident? What, if any, considerations must you look into from a CRA standpoint in this instance?

Hoping to get some insights from those who've already dealt with these situations, I'm going to speak with a tax accountant for more personalized advice.
 
W

wink

Hero Member
May 25, 2021
728
360
mayple said:
Secondly, can you maintain 401k in the US (assuming continued employment with the US as a cross-border worker for example) despite being a Canadian tax resident? What, if any, considerations must you look into from a CRA standpoint in this instance?
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Yes. But while considering RRSP contribution, you need to take 401k contribution also into consideration.
 
M

mayple

Star Member
Dec 30, 2017
195
56
wink said:
Yes. But while considering RRSP contribution, you need to take 401k contribution also into consideration.
Click to expand...
Thanks, I'm assuming you mean to say we can continue to maintain 401k in the US despite being a canadian tax resident. Correct? Any idea about Roth IRA question
 
M

mayple

Star Member
Dec 30, 2017
195
56
wink said:
Read this link:

https://www.canadavisa.com/canada-immigration-discussion-board/threads/moving-to-canada-from-usa-with-approved-i140.505967/post-8679533
As per this, he (harirajan) says it is possible. I am not sure about Roth IRA. Per him, you can even keep your brokerage accounts. My CPA advised me not have it.
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Thanks. What he is saying in that post is the ability to trade i.e. you can continue to trade and/or retain the brokerage account, IRA and 401k. For IRA, my question is about contribution to the IRA (not trading). So e.g. if I'm a Canadian tax resident for year 2021 and 2022 but work in the US, can I contribute to Roth IRA for 2021? I believe the answers I've read so far state that "Canadian contribution" i.e. contributing to Roth as a Canadian resident removes the tax free waiver that IRA typically has. But if you stop contributing to Roth after becoming Canadian tax resident, you can keep it (and trade the already existing/previous contributions/investments).

So, I'm trying to figure out whether someone has personal first hand experience contributing to Roth IRA after becoming Canadian tax resident. If so, did you pay Canadian taxes on earnings in Roth (even though they wont be taxed in the US)

Also, did your CPA give a reason why to not have the accounts? Are you comfortable sharing details of your CPA since I'm looking to get a reliable CPA for taxes
 
W

wink

Hero Member
May 25, 2021
728
360
mayple said:
Thanks. What he is saying in that post is the ability to trade i.e. you can continue to trade and/or retain the brokerage account, IRA and 401k. For IRA, my question is about contribution to the IRA (not trading). So e.g. if I'm a Canadian tax resident for year 2021 and 2022 but work in the US, can I contribute to Roth IRA for 2021? I believe the answers I've read so far state that "Canadian contribution" i.e. contributing to Roth as a Canadian resident removes the tax free waiver that IRA typically has. But if you stop contributing to Roth after becoming Canadian tax resident, you can keep it (and trade the already existing/previous contributions/investments).

So, I'm trying to figure out whether someone has personal first hand experience contributing to Roth IRA after becoming Canadian tax resident. If so, did you pay Canadian taxes on earnings in Roth (even though they wont be taxed in the US)

Also, did your CPA give a reason why to not have the accounts? Are you comfortable sharing details of your CPA since I'm looking to get a reliable CPA for taxes
Click to expand...
If I understand correctly what he said, if they are not bothering you to provide the address proof, keep investing.
 
M

mayple

Star Member
Dec 30, 2017
195
56
wink said:
If I understand correctly what he said, if they are not bothering you to provide the address proof, keep investing.
Click to expand...
Right. You "may" be able to keep investing if you have access to the accounts, but whether from a tax perspective it causes more burden or not is the question. For example, if CRA does not provide the same tax benefit to Roth IRA as US, you're increasing your tax liability by selling and/or earning dividends/interest since you will have to report it on your Canadian return.

Hopefully someone who's already dealt with these things in the past years can shed some light.
 
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