QUESTION: Can you please suggest a US source (expert)for assistance (direction) to transfer a Canadian LIRA tax free if possible into a US RIA. The owner is now a US resident with green card who will ultimately retire in the US. Many thanks
david ingram replies:
It cannot be done. You can transfer a US IRA (Independent Retirement Account) to an RRSP but can not transfer a Canadian LIRA (locked in retirement account) to an IRA.
If the plan was registered in Alberta or BC, you can apply to withfraw it with the payment of 25% income tax to Canada. I also understand that Ontario is close to passing the same legislation.
XXXXXXXXXx wrote
Hi David,
You may remember that we spoke a few weeks ago about trying to unlock a locked in RRSP as a foreign resident. Well, we finally unlocked it and got the funds and I wanted to thank you for helping. It took some perservierence but it paid off.
Something you may want to warn people about is the amount of tax withheld. As a foreign resident I am not entitled to a "personal exemption" but I pay 25% flat tax rate. When the switch was made, MRS withheld more than that and I caught it. This is not the first time this has happend to me and it also happend when my husband closed his RRSP account. The extra 4% or so can make a huge difference!
Thanks again for your help.
All the best,
xxxxxxxxx, Mexico
xxxxxxxxx
david ingram replies
It is unusual for them to withhold too much. Usually, particularly with smaller amounts, they withhold too little an dthe taxpayer is hit with a bill at the end of the year.
25% is the fixed withholding for a non-resident of Canada. If they do withhold too much, one can file a tax return and get the difference back.
It is also not unusual to be turned down at first.
The following person was turned down as well but Dan Walkow of Seabank Capital managed to free it up for the person (who is not a client) and he sent me the following at the end of a long comment about green cards.
( Dan Walkow
Seabank Financial
White Rock
Local (604) 541-9952
L D (866) 541-9952
www.seabankcapital.com)
P.S. The two year out of Canada residency
with respect to LIRA's did apply to
me.
----------------------------------------------------------
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========================================Hi David
I have a telephone apt for 9:30 Wed. morning regarding trying to find a creative way to unlock my locked in RRSP. The following is a response which I got from MRS as to why they can not do if for me. Although the fund was registered in Ontario, before I became a foreign resident in Mexico, I had always lived in Alberta and should therefore I woneder if i should not be subject to Alberta regulations, not Ontario. If this is mission impossible then I guess I will have to accept it but if you can in fact find a creative way to open the account I would like to engage your service.
Thanks
david ingram replies:
I have no method of removing an Ontario LIRA from the account as a non-resident.
Alberta and BC yes, but Ontario has not passed legislation to make it happen.
It is expected to happen but has not happened yet. One of my newsletters implied that Ontario was okay but that was premature or wishful thinking as the legislation did not get passed with a change in government.
Your only solution is to have the company designate it Alberta somehow but that is unlikely becase the pensions are usually designated to be at a company's head office.. However, A letter confirming your employment in Al;berta all those years might walk through the paperwork with Revenue Canada. Since they seem to be able to deal with its existence in Ontario, even though it is now in Quebec, it just might work.
The Province of Alberta would also need to agree.
If your research about Ontario plans was from my site alone I apologize. I was not alone though. For a few months in 2006, a lot of us thought it had happened.
david ingram
From: "MRS Correspondence" <[email protected]>
Dear xxxxxxxxxxxxxxThank you for your reply and we apologize for the delay in our response.Money within locked-in plans originated from registered pension plans, and as a result, these types of accounts are regulated by pension legislation. The legislation places restrictions on redemptions from such accounts. Provinces have their own laws and regulations that govern pensions registered with their provincial pension regulator.We have been in contact with your former employer. They have advised this locked-in plan was established with Merrell Dow under Ontario legislation. Following corporate restructuring the company became known as Marion Merrell Dow Canada, based in Laval, QC. As part of this restructuring, they were converting plans to Quebec legislation, however, they indicate this process was not complete at the time of your departure from the company in 1995, thus the initial designation under Ontario legislation would be accurate.Under Ontario pension legislation, there is no provision for the unlocking of funds due to non-residency.For further information, you may wish to contact your former employer, now known as Hoechst Marion Roussel and still based at the same address in Laval, QC. Their website can be found at www.sanofi-aventis.ca.We also recommend that you consult with your Financial Advisor xxxxxxxxxxx in Victoria, BC, at xxxxxxxxxxx.Should you have any questions or concerns, or if we can be of further assistance, please e-mail us at [email protected].Sincerely,Sara WinnettClient Service Correspondent(416) 964-0660 or 1-800-265-6424, ext. 3358Account Access now available at www.mrs.com
From: ]
Sent: Monday, July 16, 2007 5:37 PM
To: MRS Correspondence
Subject: RE: locked-in RSSP redemptionRegarding my locked-in RRSP
I am somewhat confused as to the logic regarding your inability to
From the research I have done there are 3 provinces which allow the funds to be unlocked. Ablerta, BC and Ontario. I was a resident of Alberta all my life, before retiring to Mexico in 1999.
The company which I worked for had is head office in PQ., so first I do not understad how my RRSP originated in Ontario ad eve if it did, what about the Alberta residency?
If I were to choose to have a monthy pay out from this fund would I not be subject to the flat 25% withholdingtax and not be intitled to the $6,000 (0r whatever) personal exemption. How can it be that on one had I am being treated as a foreign resident but on the other am subject provincial regulations regarding my money? Could you or someone please explain this to me.
Thanks
xxxxxxxxxxxx
From: "MRS Correspondence" <[email protected]>
To: "
Subject: RE: locked-in RSSP redemption
Date: Mon, 16 Jul 2007 16:56:06 -0400
Dear xxxxxxxxxxxxThank you for your e-mail regarding your M.R.S. RRSP #29xxxxx.A check of our records indicates this plan is locked-in under Ontario pension legislation. Under that legislation, it is not possible to apply as a non-resident to unlock the funds, and therefore we would not be able to process the request.A notice on this issue was sent by fax on June 12, 2007, to the office of your Financial Advisor on file, xxxxxxxxxxxxxxxxx. Should you have any questions or concerns, or if we can be of further assistance, please contact Client Services at 1-800-387-2087, or e-mail us at [email protected].Sincerely,Sara WinnettClient Service Correspondent(416) 964-0660 or 1-800-265-6424, ext. 3358Account Access now available at www.mrs.com-----Original Message-----
From:
Sent: Monday, July 16, 2007 3:39 PM
To: MRS Correspondence
Subject: Re: locked-in RSSP redemptionSir,
I have a SDLRSP with MRS plan number 29xxxxxxxx. xxxxxxxxs xxxxx Financial services Inc. suggested I deal directly with you. For eight years I have lived outside of Canada and am officially a foreign resident. I believe that the Plan was registered in PQ (company head office) but I was a resident of Alberta throughout my working life. I wish to cash out my SDLRSP. What do you need from me to facilitate this?
yours,
xxxxxxxxxxxx
David Ingram wrote:
On January 29, 2008, David Ingram wrote:
It is very unlikely that blind or unexpected email to me will be answered. I receive anywhere from 100 to 700 unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first. I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. e bankruptcy expert US Canada Canadian American Mexican Income Tax service and help
However, I regularly search for the words"PAYING CUSTOMER" and
always answer them first if they did not get spammed out. For the last two
weeks, I have just found out that my own email notes to myself have been spammed
out and as an example, as I wrote this on Dec 25, 2007 since June 16th, my
'spammed out' box has 47,941 unread messages, my deleted box has 16645 I have
actually looked at and deleted and I have actually answered 1234 email questions
for clients and strangers without sending a bill. I have also put aside
847 messages that I am maybe going to try and answer because they look
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$1,700 would be for two people with income from two countries
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable. In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years. We have done several catch-ups where the client has recieved as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.
David Ingram expert income tax service and immigration help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty advice on bankruptcy
It is very unlikely that blind or unexpected email to me will be answered. I receive anywhere from 100 to 700 unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first. I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. e bankruptcy expert US Canada Canadian American Mexican Income Tax service and help
Therefore, if an email is not answered in 24 to 48 hours,
it is likely lost in space. You can try and
resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from 'me', you
will have to phone to make an appointment. Gillian Bryan generally accepts
appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday
VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321.
david ingram
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David Ingram gives expert income
tax & immigration help to non-resident Americans & Canadians from
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This is not intended to be definitive but in
general I am quoting $900 to $3,000 for a dual country tax
return.
$900 would be one T4 slip one W2 slip one or two
interest slips and you lived in one country only (but were filing both
countries) - no self employment or rentals or capital gains - you did not move
into or out of the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no
rental
$1,300 would be the minimum with a move in or out
of the country. These are complicated because of the back and forth foreign tax
credits. - The IRS says a foreign tax credit takes 1 hour and 53
minutes.
$1,600 would be the minimum with a rental or two in
the country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,700 would be for two people with income from two countries
$3,000 would be all of the above and you moved in
and out of the country.
This is just a guideline for US / Canadian
returns
We will still prepare Canadian only (lives in
Canada, no US connection period) with two or three slips and no capital
gains, etc. for $200.00 up.
With a Rental for $400, two or three rentals for
$550 to $700 (i.e. $150 per rental) First year Rental - plus
$250.
A Business for $400 - Rental and business likely
$550 to $700
And an American only (lives in the US with no
Canadian income or filing period) with about the same things in the same range
with a little bit more if there is a state return.
Moving in or out of the country or part year
earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
each.
18 RRSPs would be $900.00 - (maybe amalgamate a
couple)
Capital gains *sales) are likely $50.00 for
the first and $20.00 each after that.
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable. In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years. We have done several catch-ups where the client has recieved as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.
This is a guideline not etched
in stone. If you do your own TDF-90 forms, it
is to your advantage. However, if we put them in the first year, the computer
carries them forward beautifully.
This from "ask an income trusts tax service and immigration
expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily
basis with expatriate tax returns with multi jurisdictional cross and
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