# Rolling IRA's after moving to Canada



## Ridingbye (May 15, 2009)

Hey. My wife and I moved here on a Work Permit (NOT a permanent resident) as a job transfer. I remain employed by a US company, but living and working in Canada on a permit. My wife was issued an Open Work Permit which is valid as long as I am under a valid permit. (There's a reason for all this - bear with me pls)

She quit her US job, and we move to Calgary. She gets the letter from her employer that she has 90 days to take a lump sum distribution, rollover into qualified plan... She calls Charles Schwab - and they say "oh you screwed up. You had to set up the IRA acct BEFORE you left the US to roll over. And then you can only do so if you are only in Canada for 1 year"

:spider: sticky... So have we spun a web we got caught in - or is my spidey common-sense correct in thinking the schwab guy should be schwabbin' decks instead of advising on "immigration" laws???

Any US ex-pats out there run into the situation with a spouse's work IRA having a problem being rolled because you fled (er... left) the country too soon.


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## Bevdeforges (Nov 16, 2007)

AFAIK, the Schwab guy is probably correct. You can't set up an IRA if you are resident overseas (i.e. if your current earnings are subject to the overseas earned income exclusion). And you have to be in Canada (or wherever) for a year before you can claim the overseas earned income exclusion. You're in the awkward position that your rollover would fall in a year when your earnings are subject to the exclusion, even if you haven't yet qualified. And before you ask, I'd hesitate to "skip" the exclusion this year, simply because once you've renounced the exclusion for any reason, it can be difficult to reinstate it later on.

OTOH, you may want to check with your wife's employer to see if she couldn't just leave her 401K funds where they are, pending her return. I know that used to be an option. I still have my 401K at an ancient employer, one that has been taken over (a couple of times) by new owners. (Obviously, I'm assuming that the distribution is from a 401K plan.) It's not obligatory that you have to take a distribution when you leave the company - but that policy could vary by employer.

If the employer can't help, try checking directly with the company that holds the 401K assets (unless, of course, that is Schwab). 
Cheers,
Bev


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## Ridingbye (May 15, 2009)

Bevdeforges said:


> AFAIK, the Schwab guy is probably correct. You can't set up an IRA if you are resident overseas (i.e. if your current earnings are subject to the overseas earned income exclusion). And you have to be in Canada (or wherever) for a year before you can claim the overseas earned income exclusion. You're in the awkward position that your rollover would fall in a year when your earnings are subject to the exclusion, even if you haven't yet qualified. And before you ask, I'd hesitate to "skip" the exclusion this year, simply because once you've renounced the exclusion for any reason, it can be difficult to reinstate it later on.
> 
> OTOH, you may want to check with your wife's employer to see if she couldn't just leave her 401K funds where they are, pending her return. I know that used to be an option. I still have my 401K at an ancient employer, one that has been taken over (a couple of times) by new owners. (Obviously, I'm assuming that the distribution is from a 401K plan.) It's not obligatory that you have to take a distribution when you leave the company - but that policy could vary by employer.
> 
> ...


Thank You Bev. Will pursue seeing if they will allow parking it due to "strange ciurcumstances"


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## Bevdeforges (Nov 16, 2007)

Ridingbye said:


> Thank You Bev. Will pursue seeing if they will allow parking it due to "strange ciurcumstances"


It shouldn't even be a matter of "strange circumstances." Last I knew (though these things do tend to change over time) you have the option to simply leave your 401K with the employer when you leave the company - for whatever reason you might want to do so.
Cheers,
Bev


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## dthompson (Jun 15, 2009)

Ridingbye said:


> Hey. My wife and I moved here on a Work Permit (NOT a permanent resident) as a job transfer. I remain employed by a US company, but living and working in Canada on a permit. My wife was issued an Open Work Permit which is valid as long as I am under a valid permit. (There's a reason for all this - bear with me pls)
> 
> She quit her US job, and we move to Calgary. She gets the letter from her employer that she has 90 days to take a lump sum distribution, rollover into qualified plan... She calls Charles Schwab - and they say "oh you screwed up. You had to set up the IRA acct BEFORE you left the US to roll over. And then you can only do so if you are only in Canada for 1 year"
> 
> ...


Hello:

The key here is that you need to roll your 401K or IRA in to a self-directed IRA with a firm where both the individual advisor and the firm are NASDAQ licensed, and can deal with Canadian residents. There are not many of us out there. I have such licenses. You can contact me and I can fill you in on many more details too numerous to mention here.

I can be contacted toll-free at 866-775-7707.

Sincerely,

Darrell Thompson


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