In this video, we discuss different cross-border tax strategies. In particular, is it better to take RRSP withdrawals or implement a Roth conversion strategy for retirement? We discuss:
- The Retirement “Tax Valley”
- Filling up this Tax Valley with RRSP Withdrawals or Roth Conversions
- Benefits of RRSP Withdrawals and Roth Conversions
- Determining which is best for you
- Determine how much you should do each year
You can watch the video here:
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Good ideas, I should be so fortunate to have to worry about filling up the 12% tax bracket. Unfortunately (or fortunately because it means we make the money), we are more in the 22% and I think this year we may creep a bit into the 24% bracket. We also haven’t yet turned on my social security or had to deal with RMDs.
We used you a few years ago to review our finances for retirement and I’m familiar with the 15% and 25% Canadian tax withholdings for RRIF/RRSP withdrawals depending on the amount you take out. However, I thought if I took out $15000 from my RRIF, I pay 15% to the Canadian government if I meet the 15% qualifications, that $15,000 is added to my US return and I pay taxes on it at my marginal tax rate similar to an IRA withdrawal and I get credit for the 15% tax I paid to Canada (for the purposes of this question I’m ignoring the exchange rate between USD and CAD). However, in my case I have a lot of long term capital gains in my RRIF and I’ve seen some discussions elsewhere that imply you can use this to adjust the amount of US tax owed? Seems too good to be true. Currently, the capital gains on my account are about 60% of the total value although not all of these may be long term capital gains but the majority (90+%) are. I looked on your site and I didn’t see anything on this issue. Do you have any information on this?
Hi Bruce,
Good to hear from you. Yes, I have heard of people doing this and also, only including the gain in the RRSP/LIRA since being in the states on their U.S. income. The cross-border tax preparer I work with includes the full amount of the withdrawal on the U.S. tax return. This is probably the most conservative way to report the income but should keep you out of trouble.
Thanks,
Bryan