Trump and the long-arm of the tax man - Avoid paying tax on your US holdings

Written by Tiffany Woodfield, TEP, Associate Portfolio Manager, CRPC®, CIM®

It is common for individuals and their families to have assets on both sides of the Canadian/USA border.

Trump and his tax policies can take a huge bite from these if proper planning is not completed.

Recently, a client of SWAN Wealth Management of Raymond James, Mary, received a letter stating she had 30 days to find another service provider or her IRA and 401k assets would be liquidated from her US brokerage account. She is a U.S citizen who relocated to Canada in 2018.

Many US citizens or Canadians who have worked in the US have received these letters.

A family may have a U.S. IRA/401k and Canadian RRSP/TFSA. Most advisors and banks are not legally licensed or well versed in the intricacies to advise on cross-border issues.

Tax consequences can be severe and these issues need to be handled by a fully qualified professional advisor in conjunction with a cross-border tax accountant. Most U.S. firms aren’t licensed to provide advice to Canadian residents. Some advisors even try to “trick” the SEC by using a US address. This will not work for long.

Cashing out an IRA or 401k causes an immediate payment of tax.

SWAN Wealth Management specializes in the Canadian/US process and we can educate clients about rolling over assets from a 401k to an IRA. This unique service helps people, like Mary, to avoid a potentially huge tax bill. An IRA can name a non-spouse as the beneficiary and maintain its tax deferred status.

Mary now understands that she can move her American investments to Canada without selling them. Since Mary is working with a Canada-U.S. cross-border advisory team, she avoids the long arm of Trump, and Trudeau, from finding its way into her pocket. Also,

Mary now has one advisory team handling her IRA, RRSP and any investments she may accumulate while in Canada or if she returns to the USA.

Tiffany and John, the founders of SWAN, are in the unique position of being able to hold both Canadian and U.S investments in either Canadian dollars or US dollars, thus avoiding the need to convert currencies. This is due to their dual licensing and that they work for both a Canadian and a US investment firm.

The creation of a thorough cross-border plan and the involvement of professionals saves time, tax and a great deal of hardship.

For more information go to www.swanwealthcoaching.com

Next Steps

If you’re a Canadian resident or are planning on moving to Canada or the US and need assistance with moving and optimizing your investments, estate planning, wealth management and portfolio management, please get in touch. At SWAN Wealth, we specialize in Canadian financial planning, cross-border financial planning and cross-border wealth management.

About the Author

TIFFANY WOODFIELD

Tiffany Woodfield is an Associate Portfolio Manager licensed in Canada and the USA, a Chartered Investment Manager (CIM), a Chartered Retirement Planning Counselor (CRPC), a Trust and Estate Practitioner (TEP) and the co-founder of SWAN Wealth Management, along with her husband, John Woodfield. Tiffany advises clients who live in Canada and the United States and want to simplify their cross-border financial plan, move their assets across the border, and optimize their investments to minimize their tax burden. Together, Tiffany and John Woodfield help their clients simplify their cross-border finances and create long-term revenue streams that will keep their assets safe whether they live in Canada or the U.S.

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