Subject: Locked-in RRSPs, Pensions non-resident
Expert: taxman at centa.com
Date: Friday April 07, 2006
Time: 02:01 AM -0700
QUESTION:
The whole concept of Locked-in RRSPs is unbelievable. Here we are
all Canadians and should have the same rights, whomever we worked
for, what Province we live(d) in, or which Jurisdiction our
Pension falls under. Not true. There doesn't seem to be a place
to go to find information on this, to correct this, or to discuss
this. I just set up a Yahoo group if that can be of help:
ca.groups.yahoo.com/group/Locked-in_RRSP. It needs publication.
Can you help? It will be an open membership until such time that
people try to take it over for spam.
A question I would have, is can a non-Canadian have a locked-in
RRSP. My wife is not Canadian so what would happen if I died? I
live in the Philippines (and am Canadian).
----------------------------------
david ingram replies:
Depending upon what province you moved from, you can likely
unlock your RRSP and withdraw it. Read these other two answers:
------------------------------------------
My question is: Applicable to both US and Canada
QUESTION: I am a permanent Resident in the United States. I have
a locked in
RRSP of about $500,000 CDN and am 56 years of age.
When will I be able to liquidate the RRSP and what tax will be
due and to
which country. My full employment income is US based and all
taxes due are to
the US government.
-----------------------------------------------------------------
----------
david ingram replies:
A locked in RRSP can NOT be rolled into a RRIF. It can be rolled
into a
lifetime annuity or a LIF (Life Income Fund) or a LRIF (Locked-in
Retirement
Income Fund). If your LIF was from Ontario, Alberta or BC or a
federal
pension (CN Railroad for instance) a LIF requires you to purchase
a life
annuity by age 80, an LRIF does not, leaving you more control
over your
money,
If you do the annuity route, Canada will get 15% tax under
Article XVIII of
the US Canada Income Tax Treaty. You will then report the income
again on
your US return and claim the 15% tax paid to Canada on US form
1116 under
the "other" classification.
BC and Alberta and I think Ontario will allow you to withdraw
your RRSP if
you become a non-resident of Canada.
Those rules can be found in this older CEN-TAPEDE
---------------------------
QUESTION:
I am a Canadian citizen currently resident of Washington state,
USA. I
have a locked-in RRSP in TD Canada Trust in Alberta. I would like
to un-lock
the RRSP for the purpose of purchasing a home here. The bank
suggested
contacting the government and asking for permission, but could
give me no
other contact information or advice. Is it possible to make this
transaction, and how would I go about it?
Thank-you
-------------------------------------------------------
david ingram replies
You are in luck. Alberta is one of three jurisdictions which
allow the
unlocking g of a locked in plan when you become a non-resident of
Canada.
However, I have never been involved in an Alberta locked-In plan
withdrawal.
In BC, you must be gone for more than two years and write the
Superintendent
of Financial Institutions for written permission to withdraw the
money. The
superintendent writes the letter to you, you take it to the
Financial
Institution which withholds 25% tax and gives you the rest. A
letter from
the CRA will also help.
Alberta's rules allow for the withdrawal as soon as you have
become a
non-resident. You need a letter from the CRA acknowledging that
you are a
non-resident. Take it to the TD - Canada Trust Branch along with
a copy of
http://www.finance.gov.ab.ca/publications/pensions/pdf/info_acces
sing_pensio
n_funds.pdf#search='unlocking%20rrsp%20non%20resident%20alberta'
And you should get your money less a 25% withholding tax.
Let me know what happens.
-------------------------
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