Cross-Border Wealth Planning FAQs
Managing your wealth across borders
If you’re a Canadian moving to the U.S. or an American moving to Canada, our cross-border wealth planning team can help you plan for a smooth transition.
We specialize in handling the complex investment and tax planning issues that can arise when you have financial interests on each side of the border. With licensing in both countries that allows us to provide advice and ongoing management of Canadian and U.S. investments – a truly holistic and efficient approach. This type of licensing is noteworthy. As of 2020, only 25 per cent of advisors at Raymond James Ltd. were licensed for cross-border services, firm statistics show.
Below, we offer general information about the services we provide. Because of the complex nature of cross-border wealth planning, we recommend scheduling a comprehensive meeting to allow our team to provide detailed advice and recommendations to your unique situation.
Cross-Border Wealth Solutions
Whether you have found out that your U.S. brokerage firms cannot hold U.S. retirement accounts like IRAs, 401(k)s and/or Roth IRAs for people moving to or residing in Canada or you have questions about cross-border retirement planning, Plena Wealth Advisors can help. With the ability to transfer, manage and invest your IRA, 401(k) or Roth IRA, we can help you understand the complexities of having interests on both sides of the border. Understanding how the laws in each country will apply to you, and how they interact, is key. Some common questions we are asked are answered below. For some more detailed information, please see our cross-border resources page.
Q: I’m a Canadian moving to the U.S. Do I have to close my Canadian accounts?
A: When a Canadian moves to the U.S., it’s often the case that their Canada-based investment advisors do not have the proper registrations to continue servicing their accounts. A Canadian investment firm cannot open an IRA, for example, as these are U.S.-domiciled retirement accounts. This presents a challenge and leaves most investors thinking they don’t have a choice other than the often less than ideal one of collapsing their Canadian retirement plan and bringing the value of the account into taxable income.
As a cross-border firm, Raymond James (USA) Ltd. was created to handle these types of issues. As an affiliate of this Canadian-based, U.S. registered investment firm, we offer specialized advice to Americans living in Canada and Canadians living in the U.S. for their cross-border investment needs. In the situation outlined above, we would use our infrastructure to open new U.S. retirement accounts and, through our dual registration, continue to manage assets in Canada, such as an RRSP. This offers all-in-one convenience as we incorporate these accounts into an overall wealth management and investment strategy customized to your needs.
Q: I’m moving from the U.S. to Canada – how can your cross-border wealth planning team help?
A: Transitioning from one country to another can often bring with it financial complexity. When it comes to the financial aspects of moving from the U.S. to Canada, there are many rules to understand and decisions that need to be made concerning your overall wealth, with retirement, tax and investment planning.
Most Americans moving to Canada maintain their U.S. citizenship. In this situation, you will face the complexities of having tax obligations on both sides of the border – complexities that only few professionals have experience in managing.
Before your move, we would thoroughly analyze your overall situation and offer personalized guidance. We would collaborate with a cross-border tax professional at the home office as well as with external professionals in the field to help you prepare for relocation, providing you with “moving to Canada” checklists and action items for each type of asset you hold. Once we’ve gathered this data, our team would prepare a cross-border financial plan that informs a coordinated investment strategy specific to your cross-border status (e.g., all assets, on either side of the border, can be managed in one place by one advisor and are managed with consideration to the unique ongoing tax exposure on both sides of the border).
Q: I’m moving from Canada to the U.S. – how can your cross-border wealth planning team help?
A: The financial aspects of moving from Canada to the U.S. can be complex, with tax considerations and overall wealth, retirement and investment planning decisions to handle.
When a Canadian citizen leaves Canada to work in the U.S. (or a U.S. person who has been living in Canada moves back), it’s often the case that they want to ensure they are seen by the CRA in Canada (equivalent to the IRS) as a non-resident of Canada, as Canada does not tax based on residency – i.e., once a Canadian leaves Canada to work elsewhere, they do not have a tax obligation in Canada. That requires some specific planning. This is important as a Canadian does not want to find out a few years from now that the CRA still considers them a resident/taxpayer in Canada and that they owe the CRA taxes and penalties.
It’s also often the case that this person has roots in and plans to return to Canada, and so they want to maintain some of their investments in Canadian dollars and in the Canadian market. This is difficult for most advisors in Canada, as they are not licensed in the U.S. under FINRA/SEC and cannot continue to manage the existing accounts. In turn, if they sit down with a new U.S. advisor in the location they move to, that advisor will be licensed to look after their U.S. investments but does not have the infrastructure in place to open and maintain Canadian dollar investment accounts or Canadian retirement accounts.
Before your move, we would thoroughly analyze your overall situation and offer personalized guidance. We would collaborate with a cross-border tax professional at the home office as well as external professionals in the field to help you prepare for relocation, providing you with “moving to the U.S.” checklists and action items for each type of asset you hold. Once we’ve gathered this data, our team would prepare either a cross-border financial plan or a U.S.-focused financial plan that informs a coordinated investment strategy specific to you (e.g., all assets, on either side of the border, can be managed in one place by one advisor and are managed with consideration to the new tax residency of the client and the potential renewed tax residency in Canada if they plan to return).
Q: I’m a U.S. resident who inherited Canadian dollars. How can I maintain the assets in Canadian currency while living in the U.S.?
A: With advisors licensed both in the U.S. and Canada and who have the ability to set up multi-currency investment accounts, our team can assist with this situation. If you don’t want to exchange your Canadian dollars for U.S. dollars, we would design an investment strategy in Canadian dollars based on your goals and needs. If, in the future, you need to move the money into U.S. dollars, we would be able to handle the foreign exchange conversion.
Q: Can I keep my IRA if I move to Canada?
A: Yes, we can transfer in, hold, manage and invest your IRA accounts for you with the help of our cross-border financial advisors who are dually licensed to work with U.S.- and Canada-based clients. You won’t have to collapse or liquidate your IRA, an action that risks significant penalties or tax consequences.
Q: Can I keep my Roth IRA if I move to Canada?
A: Yes, while most U.S. brokerage firms cannot hold Roth IRAs for people residing in Canada, Plena Wealth Advisors can help you maintain these accounts without any inadvertent tax consequences. There is also additional tax filing that needs to be completed in your first taxation year when moving to Canada, this one-time Treaty election will allow for your Roth IRA to remain tax exempt in Canada. We recommend consulting a cross-border tax advisor to help you file the Treaty Election form.
Q: What happens to my Social Security if I move to Canada?
A: If valid contributions were made to Social Security during years in the U.S. and you meet the eligibility requirements, you will be entitled to your Social Security benefit in Canada. Social Security paid to U.S. citizens residing in Canada is not taxable in the U.S. since payments are only taxable in the country of residence. Want to find out more? Check out our Social Security blog post.
Q: Can I roll my IRA into an RRSP?
A: Rolling over or transferring an IRA to an RRSP is an option, however, this is not the best solution due to inadvertent tax consequences resulting in double taxation (Canadian and U.S. taxes payable). A better option is to work with a cross-border financial advisor who can continue to hold your IRA and have it actively managed by a team of dual-licensed financial advisor who specializes in cross-border wealth planning.
Q: What is the equivalent of a 401(k) in Canada?
A: The equivalent of a 401(k) plan is a group Registered Retirement Savings Plan (group RRSP) in Canada, while the equivalent of an IRA is an RRSP. There is no ability to “roll over” 401(k) and IRA accounts into RRSPs without first collapsing the account and risking significant penalties or tax consequences. Our team of cross-border wealth planning experts can help transfer in, manage and invest your 401(k) and IRAs for you.
A SPECIALTY IN CROSS-BORDER WEALTH PLANNING
Whether you're moving to Canada or hold assets in the U.S., we provide expert guidance on tax, regulations and investments. Contact us to schedule a consultation and let's plan for your financial future.
Information in this article is from sources believed to be reliable; however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. Raymond James advisors are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters. The views are those of Plena Wealth Advisors, and not necessarily those of Raymond James Ltd. Investors considering any investment should consult with their Investment Advisor to ensure that it is suitable for the investor’s circumstances and risk tolerance before making any investment decision. Raymond James Ltd. is a Member Canadian Investor Protection Fund.
Raymond James (USA) Ltd., member FINRA/SIPC. Raymond James (USA) Ltd. (RJLU) advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered.