401(k) for Canadians?

Hi,

I have been working in US for a couple of years now. My employer matches my 401(k) contribution up to 5%. So far I have not contributed anything because I was not sure what will happen to it when I eventually settle back in Canada(Well, now it doesn't seem so bad after the recent market crash ). So here are my questions.

1. Let's say I move back to Canada in a few years and work/retire there. What will happen to my 401(k)? BTW I am only 27 right now.
2. When will I be able to cash it out without any penalties?
3. Any special tax implications for Canadians which are different from US citizens?
4. And the last unrelated question is that if I pay US taxes, does that make me eligible for Canadian Pension Plan?

1) Under the new tax treaty, IRAs are treated the same as RRSPs, although I'm not sure how you contribute to them once your tax home moves back to Canada. However there's no particular reason why you couldn't just use an RRSP and carry on contributing to a similar scheme (or the same scheme if it exists in Canada);
2) As provided for in US law, which may well change between now and the time you retire, but after retirement age you can withdraw certain amounts without penalty, check on the IRS website and with whomever you have the 401(k) with;
3) If you have an RRSP and you move your tax home to the US you have to declare RRSPs on Form 8891 every year so there may well be something that works the same in reverse. Certainly if your IRA is worth more than $100,000 (in Canadian dollars) you have to declare it on form T1164 when you file your T1;
4) There is a totalization agreement between the US and Canada so contributions towards Social Security (FICA taxes) count towards CPP in Canada (assuming you live in Canada when you claim it) - bear in mind you need to point this out on the relevant forms when you claim CPP.