RRSP question

acadien
New Member



Joined: 13 Jun 2007
Posts: 3
Location: Montréal

Posted: Wed Jun 13, 2007 8:31 pm

 

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Hello everyone!

What does one do with one's RRSP's when moving abroad? I have searched the forum but only found confusing tidbits about a 25% tax. (I admit I'm easy to confuse when it comes to finances)

I'm planning on moving to Norway (for good) in a couple of years. Ideally I would like to transfer the funds directly into a Norwegian retirement fund to avoid losing much of it to taxes. Am I just dreaming here? Has anyone ever done this (no matter the country)?

Daniel

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eddycurrents
CanuckAbroad Regular



Joined: 18 Jun 2007
Posts: 42

Posted: Mon Jun 18, 2007 4:50 pm

 

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When we moved to the US we didn't do anything with our RRSPs. We left them in Canada. A few RRSPs are not enough to keep you a "resident", in fact they are (or were) specifically exempt.

Becoming an official non-resident of Canada is important or else you still have to pay Canadian tax, at least if you live in the US. Canada & the US have a reciprocal tax agreement where you have to pay US tax first and then Canadian tax on whatever is left. I don't know if Norway has a reciprocal tax agreement, but there is probably something there you need to worry about. We sent letters and things declaring ourselves non-residents, and it was approved (fortunately) so we don't pay Canadian tax or even file Canadian tax returns.

That 25% tax thing is actually pretty cool. You can cash out RRSPs and pay a flat 25% tax on them, then bring the cash to the US. As Canadian residents, if we were to simply cash out RRSPs we would have had to pay a 46% marginal tax rate. The extra cash saved our butts since we had to put 25% down on a house because we had no US credit history.

The other thing that was nice -- we maxed out our RRSP contributions that year, got a tax refund at high marginal rates, then paid the above 25% flat tax when we cashed them out. That saved us a few thousand dollars in tax. This was 4 years ago. This loophole may be closed now, dunno. Probably not. Our financial advisor told us about this before we left.

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Reba
Moderator


Canuck in NC

Joined: 16 Jul 2004
Posts: 1506
Location: North Carolina

Posted: Tue Jun 19, 2007 3:08 am

 

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Best bet is to speak with a financial advisor before you leave for Norway. They can find out about tax repercussions or agreements and will be more knowledgeable than anyone here to advise you what to do.

I moved to North Carolina and cashed mine out after the move. There's a weird NC law about foreign investment advisement
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acadien
New Member



Joined: 13 Jun 2007
Posts: 3
Location: Montréal

Posted: Tue Jun 19, 2007 7:42 am

 

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Thank you for the replies!

I have had difficulties actually finding a financial advisor that knows the Norwegian regulations But I will keep looking (we still have time).

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