Canadian Citizen and Resident

[Guest t936]

A Canadian citizen and resident will receive a lump sum distribution from a U.S. defined benefit plan maintained by a U.S. plan sponsor. Can the Canadian citizen transfer the funds to a U.S. IRA maintained by a U.S. custodian?

Our Canadian affiliate has determined that the employee cannot directly rollover the funds from a U.S. plan to a Canadian IRA. However, transfers from a U.S. IRA to a Canadian IRA are permitted. Therefore, the issue is whether a U.S. IRA can be established on behalf of the Canadian citizen and used as a conduit to transfer the funds to the Canadian IRA.

[mbozek]

Assuming he meets the requirements for ID under the Patriot Act he should be able to establish an IRA. Need to get a tax id from the IRS. The transfer from the US IRA to the canadian IRA will be a taxable distribution under the IRC. You need to check the IRS publication on tax treaties to find out whether income tax will be withheld.