IRA / RRSP Rollover

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Immigrants from the U.S. - For those making Canada their new home, they have two options: they can leave their retirement plans in place south of the border and take the funds out when they become pension eligible; or they can transfer them into an RRSP in Canada. If they leave their plans in place in the U.S., they can start drawing on their funds when they reach the age of 59.5. Traditional IRAs must start annual withdrawal at age 70.5, in the same way an RRSP must be terminated by December 31 in the year when the individual turns 71 in Canada. For the most part, U.S. retirement savings can be rolled over into Canadian RRSPs on the same tax-deferred basis as any other tax-deferred transfer. What may come as a surprise is that there is virtually no limit on the amount that can be transferred. There is a 15% withholding tax charged by the U.S. Internal Revenue Service on funds transferred out of an IRA / 401(k) savings plan, but they may recover that amount when they file their taxes.

Returning Canadians - For those who setup IRA/401(k) plans while working in the U.S. They can rollover them to RRSP & take control here at home. They no longer have to speak to a stranger at their financial institutions in the U.S. anymore. There is a 15% withholding tax charged by the U.S. Internal Revenue Service on funds transferred out of an IRA / 401(k) savings plan, but they may recover that amount when they file their taxes.