Financial Planning Tips for Anyone Moving to Canada from the United States
Tiffany Woodfield, Senior Financial Advisor, Associate Portfolio Manager, CRPC®, CIM®, TEP®
Summary of Key Points
The video covers financial planning tips for moving from the US to Canada and how planning ahead can typically save you time and money.
If you move across the border and are still working with a US–based advisor who is not dual-licensed, you may be forced to close or transfer accounts within 30 to 90 days.
A cross-border financial advisor and accountant can provide a pre-move consultation and help you manage investment and tax issues on both sides of the border.
Passive foreign investment companies (PFICs), such as Canadian mutual funds, ETFs, RESPs, and TFSAs, can have costly consequences for dual citizens and should be avoided.
Video Script
In this video we’re going to cover financial planning tips that’ll help you when you are moving to Canada from the US. You will also learn how these can potentially help you save time and money.
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As a financial advisor licensed in Canada and the US I often work with clients who are moving from the US to Canada and don’t realize the potential negative consequences of not planning ahead.
There are three main things you need to know when moving your finances across the Can/US border.
1) Financial Advisor Licensed in US and Canada
Where you live is where your financial advisor needs to be licensed. If your advisor isn't dual-licensed in Canada and the US, you may receive a letter from your current brokerage firm stating you have 30-90 days to find another advisor or your account will be closed or liquidated. Your 401(k) may also be restricted and frozen.
An option may be to move your 401(k) to an IRA and have it managed with a dual licensed financial advisor.
2) Work with a Cross-Border Accountant
Next do a pre-move consultation with a Canadian accountant who deals with cross border clients and is familiar with both Canadian and U.S. tax obligations. They can advise you on how to make the transition even easier.
3)Watch out for PFICs
Finally, you may have issues working with a Canadian Advisor who isn’t licensed in Canada and the US because they don’t understand that certain investments in Canada are considered Passive Foreign Investment Companies or PFICs.
PFICs have a complicated and costly impact on a dual citizen, so you want to make sure you understand them well.
Have you started putting together your cross-border team?
The first thing you should do is book a consultation with a cross-border financial advisor and a cross-border accountant. Just working with a lawyer isn’t sufficient to ensure your finances are easy to access and taken care of correctly.