Mr. Ingram,
I am an American citizen living in Canada as a permanent
resident. I am 50% owner of a company Incorporated in Canada.
Each year my accountant does an extremely good job of minimizing
our tax liabilities. In fact I have $5000 in educational credits
we didn't use last year, because we didn't need them. I have a
small amount saved for retirement in a US 401K, and a US IRA. I
recently opened an RRSP, because I know I need to set aside money
for retirement. But I question the wisdom given that I don't
need the tax credits, and I am not sure which country I will
retire in. One option my life insurance agent presented is that
I could but $8000 a year in my policy. When I hit retirement
age, I could start borrowing against the policy (tax free) as
part of my retirement income. They normally suggest doing this
in addition to an RRSP, but in my case I am wondering if the RRSP
really makes sense.
----------------------------------------------
david ingram replies:
I do not "know' about your situation, but, in general, I consider
an RRSP to be the last thing that someone should buy in your
position.
Buy your RRSP after a personal non-deductible mortgage is paid
off and after you have prepared a detailed financial plan of some
sort.
Most of us do not have enough pure life insurance as well.
Remember also, that for your US return, you need to be filing:
* Form TDF 90-22.1 forms for every Canadian financial account
you have control over ($up to $500,000 fines for failure)
including the corporation and your RRSP accounts AND any cash
value life insurance or other savings plans in Canada.
* Form 8891 to report the internal earnings of your RRSP(s0
* Form 5471 to report the internal earnings of your Canadian
Corporation ($10,000 to $50,000 fine for failure).
These are serious pieces of paper.
Go to www.centa.com and read the Oct 93 newsletter about Dual
Citizenship; the Oct 95 newsletter about the responsibility of a
US citizen living in Canada, and the Nov 2001 newsletter about
making a Canadian mortgage deductible. These are in the top left
hand box .
.-------------------------------------
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
US / Canada Real Estate Specialists
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email to taxman at centa.com
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 and the author and any and all non-contractual
duties are expressly denied. All readers should obtain formal
advice from a competent and appropriately qualified legal
practitioner or tax specialist for expert help, assistance,
preparation, or consultation in connection with personal or
business affairs such as at www.centa.com. If you forward this
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