Moving back to Canada...money transfer and 401k to RRSP

[mrmojorising]

So, I've decided i'm going to abandon the glorious country (erm state
) of Texas to go back to Canada after about 3 years.

I think i'm going to transfer most of my money from my US account to an American dollar account at a Canadian bank and wait until the exchange rate improves and then by CDN dollars.

I might leave 1 or 2 grand in the US account in the hope that I will still be able to by stuff online with my US debit/credit card which is linked to my US account. I can't think of any other reason to leave more money in my US account or to close it out entirely.

Anyone have ideas about this?

Also anyone have advice about transfering 401k to RRSP or IRA or cashing out?

I'm young and there's not much money in it...something like 10k almost all my employers contributions where lost due to the markets. So I think it might be a good idea to cash out, since I haven't made any money on it if the tax penalties for cashing out early are charged on profit, and not principal.

[Steven]

There's no point going to all that trouble, just tell them you're going to be non-resident for tax purposes and make a tax treaty claim on W-8BEN with them and give them your Canadian address. It's that simple. There's no advantage to having a US dollar account in Canada, they usually pay lower interest rates.

When you do your taxes you will have to use the reported amount from 1099-INT or (if they actually do their job properly) 1042-S. If you get a 1099 phone them up and tell them they've made a mistake, but it doesn't make a hell of a lot of difference as Canadians are exempt from NRA withholding on bank interest.

When you want to transfer the money back DO NOT USE A BANK. They use currency brokers, use one too, e.g. www.xe.com

Under the 2008 tax treaty, IRAs are treated as RRSPs for tax purposes, although as a practical matter you can no longer contribute to it because Canadian banks don't know how to and you start an RRSP account instead. However you must declare the accounts to the CRA by phoning them up (until they get around to inventing a form for it, they didn't last year).

It does however save you from paying income tax on it because you don't have to cash it out.