Author Topic: Which firm for returning Canadian citizen with US Situs tax deferred investments  (Read 1125 times)

EnjoyTheJourney

  • 5 O'Clock Shadow
  • *
  • Posts: 52
As per the subject line, which firm to choose for a returning Canadian citizen with US Situs tax deferred investments? They tend to handle taxes differently and there are other potentially relevant differences between them as well.

The most common choices seem to have been Fidelity, TD Ameritrade (formerly, but bought by Schwab), and Interactive Brokers. A few noteworthy bits of information about each seem to be as follows:

1. Fidelity allows an account holder to specify how much tax to withhold to pay US taxes owed. However, Fidelity's website apparently may not function for somebody outside the US. If true, then this last point is concerning.

2. Interactive Brokers provides a relatively smooth experience overall and costs can be kept low. Their website seems to function for account holders of US Situs assets even when they are not in the US. But, they don't have a large selection of low cost index funds, when compared to other vendors.

3. TD Ameritrade seemed like a particularly good choice. However, the acquisition by Schwab is a wild card; perhaps Schwab's policies for US non resident aliens will prevail. If they do, then it is perhaps noteworthy that Schwab withholds 30% of funds for US taxes, with any overtaxation being reclaimed when filing an annual tax return. IIRC TD Ameritrade's website worked just fine for account holders who were outside US. Whether that is still true or not now that Schwab owns TD Ameritrade is unclear.

None of these providers allow substantive changes to the structure of investments after returning to Canada. Instead, investments shift to a "withdrawals allowed / reallocate only between pre-existing accounts allowed / nothing else allowed" state after a Canadian citizen with a green card and living in the US changes their status to (from the US perspective) a non-resident alien living in Canada.

Is there any key information in error or simply missing from this brief summary to help with selecting a US-based firm to look after US Situs tax deferred assets owned by a Canadian citizen who will be retiring to Canada?

Thank you in advance for any information provided.

FLBiker

  • Handlebar Stache
  • *****
  • Posts: 1537
  • Age: 45
  • Location: Canada
    • Chop Wood Carry FIRE
First, I'll make the caveat that policies on this (in my experience) are subject to change.  So please take all of this with a grain of salt.

I'm a US citizen and Canadian permanent resident, living in Canada.  Wife is also.  Fidelity and TDA have both been fine for us with retirement accounts (Roth and Traditional IRAs).  With both, we're able to trade in our accounts as usual, access the site from Canada without a VPN, and have a Canadian mailing address on our account.  IB would not allow us to hold IRAs with a Canadian mailing address.

EnjoyTheJourney

  • 5 O'Clock Shadow
  • *
  • Posts: 52
Thank you for your reply.

Thank you, particularly, for the "heads up" about IB. I now recall having read some time ago about challenges Canadians have working with IB related to US-situs tax deferred assets. It seems best to stay away from them.