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Brian Haynes

Rollovers for Canadian Non-Resident Alien Beneficiaires

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A client has passed away and had an account balance in a qualified defined contribution plan and IRA. He named his daughter as beneficiary of both, a Canadian non-resident alien. Can she elect to rollover the dc plan benefit to a US Rollover IRA and can she establish a US Inherited IRA for the IRA? If so, free of any income tax? Thanks.

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A client has passed away and had an account balance in a qualified defined contribution plan and IRA. He named his daughter as beneficiary of both, a Canadian non-resident alien. Can she elect to rollover the dc plan benefit to a US Rollover IRA and can she establish a US Inherited IRA for the IRA? If so, free of any income tax? Thanks.

This is a complicated question for which tax advice is needed. A non resident alien can apply for an ITIN from the IRS which would allow her to have a tax id for IRA distributions. See W-7 application.

As a general rule, a non spouse beneficiary can roll over a DC plan distribution to an IRA.

However there are restrictions on opening an investment account under the Patriot act. You need to talk to IRA custodians to determine what the identification requirements for opening an inherited IRA account are.

You need to check the US -canada tax treaty to see what the tax implications are. My recollection is that IRA payments to Canadan residents are subject to 15% US withholding tax.

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