401k to RRSP

[canadarch]

I have been working in the US for 5 years now, and have contributed to my employers 401k. I plan on moving back to Canada next month, and want to know if i should transfer my 401k to an IRA, or leave it where it is?

Has anyone else transferred their 401k's from the US, to an RRSP in Canada? Are there many implications to this? Will i get dinged in taxes from both countries?

Thanks

[Steven]

Basically you just leave it where it is. Whomever you have the 401(k) with may be non-plussed by this as I think Canada is the only country that has a reciprocal arrangement regarding them and it only came into force last year. You need to tell them you are still the beneficial owner and are claiming a tax treaty provision which I'm sure will confuse them.

The 2008 tax treaty basically treats IRAs as RRSPs for the purposes of Canadian law, although I don't think there is a way to transfer one to the other unless the financial institution you're dealing with has developed a method to do it, I assume they'd need to be registered in both countries at least.

There is an extremely vague comment in the general guide for the T1 this year saying you should contact the CRA directly to talk to them if you are in this situation, I assume because you're supposed to declare them to the Revenue but they haven't come up with a form for it yet.

If you can't be bothered with all this hassle, obviously cash it in before you move back to Canada so it is subject to US income taxes as they are lower.