Advisor’s Edge – No cross-border relief for tax-advantaged savings plans
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No cross-border relief for tax-advantaged savings plans
Jonah Ravel & Matt Altro
October 30, 2018
Both Canada and the U.S. allow investors to create tax-advantaged savings plans. Unfortunately, neither country recognizes the tax-preferred status of the other country’s plan. When a client holding one of these accounts moves across the border, complications arise.
This isn’t a problem for traditional retirement plans (e.g., private pension plans, RRSPs, and U.S. IRAs), which qualify for tax deferral in the other country under Article XVIII of the Canada-U.S. Tax Treaty. However, no cross-border relief is available for the following tax-advantaged accounts:
- education savings plans (RESPs and U.S. 529 plans);
- savings plans for those with disabilities (RDSPs and U.S. ABLE accounts); and
- tax-exempt savings plans (TFSAs and U.S. Roth IRAs).