Cross-Border Financial Planning Tips for Americans Retiring to Canada
Tiffany Woodfield, Senior Financial Advisor, Associate Portfolio Manager, CRPC®, CIM®, TEP®
Summary of Key Points
Retirement savings matter.
One possible strategy is to roll a 401(k) into an IRA and manage it from Canada to keep investments tax-deferred.
Canada has publicly funded healthcare, but new residents usually wait about three months, so private insurance may be needed temporarily.
Pension planning is important; you may qualify for CPP if you worked in Canada.
You should register online for Social Security while still living in the US.
A cross-border financial advisor can explain all the options, guide the process, and help avoid costly pitfalls when retiring to Canada.
Video Script
In this video we’re going to discuss the top 3 tips for Americans retiring to Canada.
You’ll also learn how to minimize your tax burden without getting into trouble with the IRS.
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As a cross-border financial advisor I often work with clients who are American and retiring in Canada. They want to know how to manage and plan income streams from Canada and the US.
There are three things you need to know as an American retiring to Canada.
1) Retirement Savings
You might wonder how to bring your retirement savings in a 401(k) to Canada.
A solution may be to rollover the 401(k) to an IRA and have it managed from Canada with a dual licensed financial advisor who can manage an IRA whether you live in Canada or the US. This avoids a major taxable event and allows you to keep your retirement savings invested and not pay tax until you take the money out.
Having a dual licensed advisor also means you can get advice when creating an income stream based on your Canadian tax residency. It is also easier when withdrawing your funds, or required minimum distributions,if they are all held in one IRA.
2) Healthcare
Canada has a great publicly funded healthcare system and if you are a Canadian Citizen or permanent resident, you don’t pay for most healthcare services. It does take about 3 months after you arrive to get public healthcare, so remember to get private coverage in the meantime.
3) Pensions
You might be thinking about pensions from Canada and the US.
You may be eligible for CPP, which is the Canadian Pension Plan. If you worked in Canada over the age of 18 and paid into CPP through payroll deductions, you will be eligible. You can also access your social security while living in Canada. It’s easiest if you sign up for online access while you still are living in the US.
Have you looked into rolling over your 401(k) into an IRA yet? It’s not difficult to do.
The first thing you should do is consult with a cross border financial advisor who can explain the process to you and advise you of other potential cross-border pitfalls.