How is a US ROTH IRA taxed in Canada?

Question

I have not been able to find a similar retirement account in Canada. If it is indeed taxable in Canada, reporting is going to be messy after we move home.

Answer 1

As I understand, a Roth IRA is an IRA that you make contributions to each year. You get no tax deduction for making the contributions, the money grows in the plan tax free, and you pay no taxes on the amounts when they are withdrawn.

There is nothing similar to a Roth IRA in Canada... yet.

In the last Federal budget, the gov't introduced the Tax Free Savings Account, which is similar to a Roth, but you can make withdrawals from the account at any time without penalty, and you don't have to wait until you retire.

You should read the US-Canada tax treaty available at the link below, and pay particular attention to Article XVIII, paragraph 1. It basically says that if a pension is not taxable in the country where it would normally be paid, then it is also not taxable in the country where the receivor of the pension is resident.

http://www.fin.gc.ca/treaties/USA_e.html

Hope this helps.