Roth IRA Rules for US Citizen Living in Canada

[Guest Kevbob]

Can a US citizen living in Canada hold a Roth IRA? Upon moving to Canada two months ago, I was told by my current custodian that I would have to take the account elsewhere since they could not do business in Canada. I've contacted other brokerages about this, and some have suggested that Canada does not consider a Roth IRA a recognized retirement instrument since the gains and/or distributions are never taxed. I'm trying to figure out if a new home for my Roth is possible, or if I need to liquidate it and pay the penalties.

[mbozek]

As a us citizen you can maintain a roth IRA regardless of where you reside because you are still taxed on your global income. As far as Canada is concerned you would be taxed on income that you earn which is subject to Canadian law, e.g., wages. However amounts deferred under a Roth IRA may not be subject to canadian income tax if it is not earned or considered a Canadian asset. You should consult the IRS publication on tax treaties and there may even be an explanation of taxation of us citizens in canada. Otherwise consult a tax advisor familar with candaian law. I dont think that lving in canada makes you ineligible to maintain a Roth IRA. I think the providers are saying that they could not accept futue contributions from u because they cannot transact business in Canada. If they are givng u a problem open a post office box in the US as your address.

[mbozek]

According to IRS rev. Proc. 2002-23, Article XVIII(7) of the US - Canadian tax treaty exempts citizens of one country from taxation by the other country on amounts which are deferred under a pension or other retirement plan under rules adopted by the other country.

[Guest Fishchick]

I think you can maintain your current account or transfer to any other custodian as long as it's inside the U.S. You will not be able to work with a local Canadian office of that company as they would not be able to take contributions to a US account in a foreign country. The firm may not be able to send you sales information or discuss investment options with you over the phone (or technically by the web) unless you are visiting the U.S.