Author Topic: Financial Plan - Moving from US to Canada Soon  (Read 841 times)

savage_detective_stache

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Financial Plan - Moving from US to Canada Soon
« on: May 25, 2018, 06:16:08 PM »
So it looks like we'll be moving to Canada in the next 12 months as permanent residents and eventual citizens hopefully.  Looking for community members to poke holes in my financial plan from a mustachian perspective.

=================

Current US Accounts with Substantial Balances:

VANGUARD
 -Roth IRA
 -IRA

HEALTH SAVINGS ADMINISTRATORS
 -HSA invested in stock market

CHASE
 -Checking account
 -Credit card

ALLY
 -Checking account
 -Saving account

HOUSE
 -Equity

============

Financial Plan Outline for Move to Canada

1. Rollover IRA and ROTH IRA from Vanguard to Interactive Brokers (due to Vanguard's harsh stance toward expat investors)

2. Invest proceeds of home sale in Interactive Brokers RRSP (Canada passive ETF allocation) and then overflow in taxable account (US REIT ETF probably for tax and diversification reasons, up to a point obviously)

3. All future savings in Canada to be funneled to Interactive RRSP first and then taxable passive investments.

4. Leave Chase US checking account and credit cards in place

5. Open Tangerine Canada checking account and credit card

6. Leave HSA alone to grow until I can withdraw penalty-free at age 65

7. Use Interactive Brokers currency trading platform to do currency exchanges very cheaply

8. I get to keep my current US job... planning to ask to keep getting paid in US dollars, but with low exchange rates and maybe iffy outlook for US dollar, maybe this would be a good time to lock in salary in CAD? Agnostic I guess.

9. Plan on renting until we ultimately find a city, lifestyle, and community that feels like home in Canada

=====================

Any major issues with the plan as outlined above???? Trying to keep it pretty simple and relatively low-cost and tax-efficient.  Thanks for any feedback!

Also, any suggestions for cheap mustachian-friendly cross border financial planners / tax specialists in the Ottawa area are welcome too. 

All the best-

Missy B

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #1 on: May 26, 2018, 04:13:41 PM »
I would not lock in my salary in Cdn dollars unless there is a compelling reason to do so. We (Cdn$) could easily drop further.
I don't have a referral for you, but you absolutely need a cross-border pro to set things up so you don't get badly f***d, now or in the future. Particularly being paid in US $ may complicate things on the tax end.

You don't mention TFSA, and this is a powerful, flexible tax-free vehicle that you should consider using before taxable (unless, of course, there is a tax issue with the American side).

Welcome. You don't say where you're planning to land, but I'm sure there's plenty of people who'd be willing to give you info and pointers about their communities to help you choose.

plainjane

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #2 on: May 26, 2018, 04:18:10 PM »
You don't mention TFSA, and this is a powerful, flexible tax-free vehicle that you should consider using before taxable (unless, of course, there is a tax issue with the American side).

There is a tax issue with the American side. Don't do this (TFSA) unless you get a green light from your tax person. Ditto RESP, RDSP. RRSP is good.

(Modified for clarify)
« Last Edit: May 26, 2018, 04:20:07 PM by plainjane »

aashusharma1

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #3 on: August 15, 2018, 12:08:59 PM »
I have a similar plan to make the move in another couple of years. I am wondering if i should plan in advance and reduce my contributions from now so less of my money gets stuck or penalized when i eventually make the move.

I plan to leave whatever i can as is in US looking at the penalties and tax implications as such.

Thoughts?

cloudsail

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #4 on: August 26, 2018, 12:28:56 PM »
I didn't know Vanguard has a harsh stance toward expat accounts. What do they do exactly?
From what I understand, Go Curry Cracker has most of his funds in Vanguard? He doesn't seem to spend much time in the U.S.

Paul der Krake

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #5 on: August 26, 2018, 12:54:50 PM »
I didn't know Vanguard has a harsh stance toward expat accounts. What do they do exactly?
From what I understand, Go Curry Cracker has most of his funds in Vanguard? He doesn't seem to spend much time in the U.S.
Vanguard is widely known to force account closures when they realize you've left the country. They just don't want to deal with the complicated legal requirements.

cloudsail

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #6 on: August 26, 2018, 03:10:20 PM »
I didn't know Vanguard has a harsh stance toward expat accounts. What do they do exactly?
From what I understand, Go Curry Cracker has most of his funds in Vanguard? He doesn't seem to spend much time in the U.S.
Vanguard is widely known to force account closures when they realize you've left the country. They just don't want to deal with the complicated legal requirements.

Oh dear, that puts rather a spin on one of our possible retirement plans. We're Canadian citizens, so we always thought that if we can't afford healthcare in the U.S. after we FIRE, we can move back to Canada.

Paul der Krake

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #7 on: August 26, 2018, 03:22:10 PM »
I didn't know Vanguard has a harsh stance toward expat accounts. What do they do exactly?
From what I understand, Go Curry Cracker has most of his funds in Vanguard? He doesn't seem to spend much time in the U.S.
Vanguard is widely known to force account closures when they realize you've left the country. They just don't want to deal with the complicated legal requirements.

Oh dear, that puts rather a spin on one of our possible retirement plans. We're Canadian citizens, so we always thought that if we can't afford healthcare in the U.S. after we FIRE, we can move back to Canada.
It's no big deal, just convert your mutual funds (if any) to the ETF equivalent, then transfer them out to another broker that caters to foreign investors.

cloudsail

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #8 on: August 26, 2018, 03:59:45 PM »
I didn't know Vanguard has a harsh stance toward expat accounts. What do they do exactly?
From what I understand, Go Curry Cracker has most of his funds in Vanguard? He doesn't seem to spend much time in the U.S.
Vanguard is widely known to force account closures when they realize you've left the country. They just don't want to deal with the complicated legal requirements.

Oh dear, that puts rather a spin on one of our possible retirement plans. We're Canadian citizens, so we always thought that if we can't afford healthcare in the U.S. after we FIRE, we can move back to Canada.
It's no big deal, just convert your mutual funds (if any) to the ETF equivalent, then transfer them out to another broker that caters to foreign investors.

When I convert them, won't I have to pay a lot of taxes on capital gains?

I'm beginning to think maybe I should look for a different broker right now, instead of continuing to buy vanguard funds.

Goldielocks

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #9 on: August 26, 2018, 04:20:37 PM »
They can transfer IRA's into another IRA without tax,  just like any rollover.

I would start looking for a company that allows Canadian residents as investors, now, however, to make it easier on you to transition. TD Ameritrade used to be one.  There are others.  Wells Fargo is NOT.

Paul der Krake

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #10 on: August 26, 2018, 04:50:09 PM »
When I convert them, won't I have to pay a lot of taxes on capital gains?

I'm beginning to think maybe I should look for a different broker right now, instead of continuing to buy vanguard funds.
If you convert from the mutual fund to the equivalent ETF (e.g. VTSAX to VTI), there is no taxable event because of Vanguard's patented structure. Then you transfer the ETFs in kind to any other broker, which also not a taxable event.

The only problem is if you hold some of the few Vanguard mutual funds that do not have an equivalent ETF, for example VWIUX.


cloudsail

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Re: Financial Plan - Moving from US to Canada Soon
« Reply #11 on: August 26, 2018, 04:54:53 PM »
When I convert them, won't I have to pay a lot of taxes on capital gains?

I'm beginning to think maybe I should look for a different broker right now, instead of continuing to buy vanguard funds.
If you convert from the mutual fund to the equivalent ETF (e.g. VTSAX to VTI), there is no taxable event because of Vanguard's patented structure. Then you transfer the ETFs in kind to any other broker, which also not a taxable event.

The only problem is if you hold some of the few Vanguard mutual funds that do not have an equivalent ETF, for example VWIUX.

Ah, I see, thanks for the information.

This is totally not something I realized was an issue. This forum is awesome. You guys are the greatest.