Search Results for: Registered Education

Canada & U.S. Education Savings Options

June 10, 2015 By Cardinal Point Wealth

“The Simpsons” is a funny show, and that’s despite—or maybe because of—the fact that it often tackles the issues that make us most anxious.

Take the episode in which Bart terrifies Homer with a campfire story about college costs for Maggie. The scene ends with Homer shrieking, “No! No! Noooo!”

I suspect that Homer speaks for many of us parents. We may not howl like the Simpsons patriarch, but the price tag for higher education definitely does nothing for the quality of our sleep.

The average undergraduate tuition for a full time Canadian student in 2015 is $5,959. That more than doubles—to $12,959 per year—for medical studies. And it more than triples, to $18,187 annually, for dentistry school. Between 2011 and 2015, tuition increased an average of 4% annually.
In the United States, a public two-year college tuition now costs $3,347 per year, a public four-year college tuiton costs $9,139 per year and a private, four-year college program costs $31,231 annually.
In addition to those figures you can add $800 to $1,000 per year for books and $10,000 or more for possible room and board.

Still, there’s wide agreement that college is worth it. Nine in 10 American parents believe a college education is an important investment in their child’s future, according to a recent national study conducted by Sallie Mae and the research firm Ipsos. Interestingly, just 48% of respondents are actively saving for that education.

Assuming that you’re part of the 90% who value college education, and that you’re committed to saving to fund at least part of your child’s education, what are the options?

Canada

Registered Education Savings Plans (RESPS)
By far, the Registered Education Savings Plan (RESP) and associated grants available for contributions make this savings plan the best option for Canadians. That explains why a 2009 survey found that 66% of Canadians saving for a child’s education contributed to a RESP. (The second most-common approach, used by 28% of respondents, was to contribute to a dedicated savings plan or account).

RESPs’ benefits include:

A minimum of 20% Canada Education Savings Grant on annual deposits of $2,500 from the year the child is born until December 31 of the year the child turns 17. Account holders can earn up to $7,200 in these grants per child.
Additional Grant and deposits for low-income families.
Saskatchewan and Quebec residents receive additional Grants.
Deposit up to $5,000 annually per child and receive Grants if you have not deposited in the past.
Set up a family plan, and if one child does not attend post-secondary schooling, the Grant can be used by the other children named on the account.
Choose your own investments.
Tax advantaged investing. You can invest in a variety of vehicles and your deposits and Grants grow tax deferred until withdrawn. Contributions are withdrawn tax free. And Grant and investment income is taxable to the child on withdrawal; factor in credits and personal exemptions, and the withdrawal could be tax-free.

Bear in mind that withdrawals can only be made while the child is attending post-secondary education.
Unfortunately, the IRS does not yet recognize the tax-deferred status of RESP accounts for Americans. For this reason it is not advisable for American citizens or green card holders living in Canada to be a subscriber of an RESP account. In this case, or if you have maximized your Grant room, an In Trust For Account may be a second option for saving.

In Trust for Accounts
“Informal trusts” are created at financial institutions and used to invest funds on behalf a minor.
This type of account is particularly useful if you deposit Canada Child Tax Benefits, Universal Child Care Benefits or a child’s inheritance, as the growth and income on these deposits will be attributed to the child rather than the account owner. If contributions are made from other income sources, secondary income (income earned on income that has already been taxed to the account holder) can be moved to a separate account that will be taxed in the hands of the child.

The child may take control of the account once he or she reaches the age of majority. ( This does not occur automatically). At that point, the account can be moved into the child’s name for education funding, or it can be left intact, with the accountholder responsible for additional deposits or disbursements for schooling or other expenses.

With either option, be aware of fund management and commission costs, which can erode your college savings. Your investment advisor can help you choose quality investments that will meet your savings objectives.

United States

College and State 529 “Qualified Tuition” Plans
Unlike RESP accounts in Canada, the U.S.-based 529 plan varies on both the state and college level. These plans number in the thousands, making research essential.
There are two types of 529: the pre-paid tuition plan and the college savings plan. Here are a few facts about each:

Pre-paid tuition plans

Enable us to purchase credits for future education (and at times room and board) at a specific college or university.
Lock in prices, covering tuition and mandatory fees. Some plans allow a room and board option.
Invest in a lump sum or by installments based on the child’s age and years of tuition purchased.
Most offer a state guarantee.
Most require state residency.

College Savings Plans

Do not lock in college costs.
Cover all expenses related to education (tuition, room and board, books and computers).
Feature high contribution limits.
Deposits are subject to investment market fluctuations.
Have no age limit; open to adults and children.
Do not have a residency requirement.

In both cases, the earnings in the 529 are free from federal tax and in most cases, as long as withdrawals are for eligible college expenses, state tax as well.

Unlike the Canadian RESP, where withdrawals can be used for any expense, 529 withdrawals must be used for eligible college expenses. If they are not, you will generally be subject to income tax on the withdrawal and an additional 10% federal tax penalty on the earnings.

Nearly every state offers a 529 plan (or plans), and it is up to each state to set the tax break or grant offered. Morningstar has surveyed 529 plans each year since 2004 and provides rankings based on costs, tax benefit and investment options. Whether to invest in a plan run thorough your home state or look elsewhere depends on a number of factors, including deposit limits and residency, as well as how highly your state’s plans are rated. Morningstar advises that, for those contributing around $1,000 annually, with savings of $25,000 or less, it usually best to stay in state. At present, residents of Arizona, Kansas, Maine, Missouri and Pennsylvania can invest out of state and still receive a tax deduction on their contributions (they may forgo other benefits if going out of state, though). However, the more you plan to invest, the less consideration should be given to state tax benefits and the more you should consider the quality and type of investments offered.

You can purchase 529 plans through a financial advisor or directly from the providers. Some direct-purchase plans, such as CollegeAdvantage 529 Savings Plan of Ohio, use passive and active investment options run by a variety of firms at a reasonable price, and are thus rated highly among direct investment options. Virginia’s CollegeAmerica Plan is the nation’s largest 529 plan, and is typically available through your investment advisor. With its high state tax deductions, it is consistently ranked by Morningstar as one of the best plans. A wealth of additional information can be found at https://www.morningstar.com/.

Given the complexities of the 529 arena, it is understandable that many families choose the general savings account option for college savings. A general savings account, managed through your investment professional, can include a wide variety of investments and can be used for expenses other than college. For perspective, nearly half of college-saving families rely on general savings accounts, while 27% use tax-advantaged accounts such as 529 plans.

Whether those you are saving for are American or Canadian, the key is to get advice before deciding which savings vehicle to use. A professional can assist you in navigating government grants and available credits with an eye on reducing the overall cost of education and helping your savings last through to graduation day.

Source: https://www.morningstar.com/, Statistics Canada, Canada Revenue Agency

Cross Border Wealth Management: Navigating your RESP

September 11, 2023 By Cardinal Point Wealth

College funding for children is constantly on parents’ minds, as the cost of tuition continues to skyrocket with no end in sight. That has heightened parents’ and grandparents’ desire to maximize college savings, by utilizing financial tools such as the Registered Education Savings Plan (RESP) in Canada. But what happens if circumstances change and the family relocates to the U.S.? Or what if your son or daughter attends a university in the U.S.? How might your current RESP planning be impacted, and what strategies should you implement to overcome potential hurdles? This article speaks to these concerns while providing insightful examples to help you navigate the complexities of college savings in a cross-border context.

Summary and Takeaways

Many parents and grandparents take advantage of the Registered Education Savings Plan (RESP) in Canada, to help fund the education of children and grandchildren. But these days it is increasingly common for either the Canadian student to attend a university in the U.S. or for their family to move across the border. That can further complicate the ways that an RESP is utilized, but this article provides information to help manage those complexities to gain the most benefit from an RESP.

Key Takeaways

There are certain tax considerations regarding withdrawals from RESPs, as well as corresponding solutions to help minimize taxes and maximize savings.
Those are based on variables such as the beneficiary’s tax status, whether their siblings will attend college, and usage of Accumulated Income Payments to fund the RESP.
In cross-border situations, the United States may require U.S. taxpayers to report income from the RESP and pay taxes on it. But there are ways to help avoid such scenarios.
Cross-border financial and tax planning is always challenging, and the circumstances impacting the RESP may change – requiring adjustments and updates to your plans.
That’s why it is advantageous to consult an experienced cross-border financial professional to help navigate the nuances of saving for college tuition, within a cross-border context.

Case Study Scenario #1: The RESP subscriber remains in Canada and the beneficiary attends a Canadian post-secondary education institution.

This is the simplest circumstance to dissect, since the RESP was designed for this specific scenario. As contributions, government grants, and earnings within the RESP accrue, buckets of income are formed. There are various withdrawal strategies available, based upon the beneficiary’s tax status, the number of remaining siblings who will attend college, and the subscriber’s utilization of accumulated income payments (AIP) to fund their RRSP (up to certain thresholds). For more information surrounding the basic mechanics of the RESP please read Cardinal Point’s article: Cross-Border Transition Planning – RESPs.

As post-secondary educational costs are realized, the taxation of RESP withdrawals is as follows:

Original contributions (used for Post-Secondary Education or PSE) are non-taxable
Grants and investment earnings (Education Assistance Payment or EAP) are taxable to the beneficiary and subject to certain withdrawal restrictions

Depending on the beneficiary’s part-time employment opportunities, it’s possible that they may owe taxes on some portion of the EAP bucket.

Case Study Scenario #2: The RESP subscriber is a U.S. resident and the beneficiary attends college in Canada.

In this scenario, the RESP is susceptible to annual taxation in the U.S., reported on the subscriber’s U.S. tax return and disclosure as an “other” foreign financial asset. This is due to the U.S. view of the RESP, which sees it as a standard taxable brokerage account. The subscriber needs to report any realized capital gains and/or dividends and interest income on their U.S. tax return. For this reason, some families transfer RESP subscribership duties to a close friend or family member who is a Canadian resident and not a U.S. taxpayer. There are pros and cons to this strategy, but it does alleviate the U.S. tax reporting issues for the U.S. subscriber.

Assuming the beneficiary attends a higher education institution in Canada, the same income taxation results detailed in Case Study #1 apply. But there is one exception. There would be no benefit gained by the student transferring a portion of their education credit to the U.S. parent (unless the U.S. parent had Canadian-sourced income and was required to file a Canadian tax return themselves). All RESP withdrawals are taxable to the beneficiary who then includes the T4A EAP distributions on their T1 as a Canadian resident. Keep in mind that each Canadian resident has access to annual basic personal amounts (BPA). This is a non-refundable tax credit that can be claimed by all individuals to provide a full reduction from federal income tax to all individuals on their taxable income up to the BPA. This is an important detail for Canadian resident students to note when withdrawing EAP while attending colleges and universities in Canada.

Case Study Scenario #3: Both the subscriber and beneficiary are U.S. residents, and the beneficiary plans to get their post-secondary education at a U.S. institution.

In both the second and third scenarios, it would have been necessary to open the RESP while both the subscriber and beneficiary were Canadian residents. Now let’s assume that the subscriber has not shifted their RESP duties to a Canadian resident and continues to report the annual RESP income on their U.S. tax return. All income, inclusive of capital gains within the RESP, needs to be converted to USD and reported and taxed in the U.S., which can lead to increased tax liability and tax preparation costs. Furthermore, if the aggregate total of the maximum market value of all foreign (non-U.S.) financial accounts is greater than $10K USD (a very low bar), an FBAR/FinCEN 114 disclosure report needs to be electronically filed. The taxpayer may also need to include a Form 8938 (higher thresholds) with their U.S. tax return. It’s debatable whether the RESP is considered a foreign trust, but recent IRS Revenue Procedure 2020-17 suggests that Forms 3520/3520-A are no longer required for RESPs.

From the beneficiary’s perspective, any income withdrawn from the RESP needs to be allocated to a specific bucket (PSE vs EAP). In the case of PSE, this is seen as a non-taxable return of capital to the subscriber. These payments represent after-tax contributions to the RESP. If withdrawals include EAP, then as a non-resident of Canada grants need to be repaid to the Canadian government and any earnings necessitate a 25% non-resident withholding tax payable to CRA on behalf of the beneficiary. But the beneficiary does not need to report the EAP on a U.S. tax return, since the account is only taxable to the subscriber.

Conclusion

Tax-related information is a powerful and essential tool to help you strategically plan optimal methods of navigating Canadian assets such as the RESP, RRSP, LIRA, and TFSA. As cross-border financial planners we are in a unique position to examine the intricacies of complex cross-border wealth management scenarios, including those regarding your RESP within Canada or the U.S. Although we only explored three commonly experienced scenarios, there are many other possibilities. To unpack your specific circumstances and learn applicable solutions and strategies, please contact Cardinal Point.

EBook: The Health Savings Account in a Canada-U.S. Context

August 4, 2022 By Cardinal Point Wealth

There are many possible options for Americans and Canadians looking for savings and investment accounts, and ideally, such an account will allow you to avoid tax on contributions, investment income, and distribution. For Americans living in the U.S., the Health Savings Account (HSA) best achieves these goals but only if distributions are used for eligible healthcare expenses. You must be enrolled in a qualified High Deductible Health Plan (HDHP). There are no income limits on HSA deductibility.

But for Americans living in Canada, none of these benefits apply. For them, contributions can no longer be made to an HSA, and income from it is taxable in Canada with complex reporting requirements. As well, moving from the U.S. may cause an HSA to be frozen by the provider. For Americans with existing HSAs, it is best to use it up for any healthcare expenses. For Canadians living in the U.S., similar issues arise regarding Tax-Free Savings Accounts (TFSAs) and Registered Education Savings Plans (RESPs). It is hoped that HSAs, TFSAs, etc. may be included in future Canada/U.S. tax treaty protocols.

If you have moved across the Canada/U.S. border, there is real benefit in the advice of a qualified cross-border specialist to optimize your finances and avoid the landmines that exist. Check out this e-book for more on this topic from Cardinal Point’s cross-border professionals, including direct comparison of the tax treatment of all the popular savings and investment accounts available in Canada and the U.S.

View the Ebook

Financial and Tax Planning – Moving from Canada to the U.S.

February 6, 2025 By Cardinal Point Wealth

Relocating from Canada to the United States involves a complex web of financial and tax considerations. To ensure a smooth transition and maintain financial stability, it’s essential to understand the implications of such a move and plan accordingly. This comprehensive guide delves into the critical aspects of financial and tax planning for Canadians moving to the U.S., including various immigration pathways.

Immigration Pathways from Canada to the U.S.

Before addressing financial and tax planning, it’s crucial to understand the immigration options available for Canadians:

Family Sponsorship: If you have immediate family members who are U.S. citizens or permanent residents, they can sponsor you for a Green Card.
Employment-Based Visas:
- TN Visa: Under the United States-Mexico-Canada Agreement (USMCA), Canadian professionals in specific occupations can obtain a TN visa to work in the U.S.
- H-1B Visa: For specialized occupations, subject to annual caps and more stringent requirements.
- L-1 Visa: For intra-company transferees who work in managerial positions or have specialized knowledge.
Investment-Based Visas:
- E-2 Visa: For investors who commit substantial capital to a U.S. business but have the intent to depart the U.S. once their E-2 visa status ends – essentially a non-immigrant visa in nature
- EB-5 Visa: Requires a more significant investment in a U.S. enterprise and the creation of jobs for U.S. workers, with the option to become a lawful permanent resident in the U.S. if certain conditions are met
Student Visas: F-1 visas allow Canadians to study in the U.S., with potential pathways to work authorization post-graduation.

Key Consideration: Each visa category has specific requirements, benefits, and limitations. Consulting with a Cardinal Point cross-border financial advisor and an immigration attorney can help determine the most suitable pathway based on your circumstances.

Tax Residency and Departure Tax

Determining Tax Residency

Upon moving to the U.S., it’s essential to establish your tax residency status:

Canada: Canada taxes individuals based on residency. Departing Canada may trigger a “departure tax,” which is a deemed disposition of your worldwide assets, potentially resulting in capital gains tax liabilities. Many tax and financial planning items can be completed before you leave Canadian tax residency to reduce or eliminate this departure tax, and properly structure your assets while in the U.S.

Understanding the Deemed Departure Tax in Canada

United States: The U.S. taxes are based on immigration and residency status. As a Canadian moving to the U.S., you’ll become subject to U.S. tax laws and may need to file U.S. tax returns.

Key Consideration: Properly severing Canadian tax residency is crucial to avoid ongoing Canadian tax obligations. This involves cutting significant residential ties, such as selling your Canadian real estate and moving your property to the U.S. Consult with a Cardinal Point cross-border tax advisor to discuss your specific situation.

Cross-Border Investment Management – Coordinated Approach to Investments

Managing investments across borders necessitates an understanding of both U.S. and Canadian regulations to ensure tax efficiency and compliance. Unfortunately, most Canadian investment advisors are not registered and licensed to provide investment advice to a resident of the U.S. nor do they have the experience overseeing the investment needs of U.S. residents. Partnering with a Canada-U.S. dually registered and licensed Cardinal Point cross-border financial advisor that can oversee investment accounts domiciled in both Canada and the U.S. ensures all cross-border assets are managed in a coordinated and integrated fashion.

Managing Retirement Accounts

Registered Retirement Savings Plan (RRSP) & Locked-In Retirement Accounts (LIRA)

Your RRSP or LIRA can remain in Canada, and you can continue to defer Canadian and U.S. taxes on its growth. The Canada-U.S. Tax Treaty allows for this deferral, but not all States abide by the Treaty. It’s also essential to understand the tax implications of withdrawals, as they will be taxed in both countries, with potential foreign tax credits available to mitigate double taxation.

Securing Your Financial Future Across Borders: Navigating RRSPs/RRIFs/LIRAs/LIFs – An eBook Guide for Tax Planning for Canadians Moving to the U.S.

Tax-Free Savings Account (TFSA), Registered Education Savings Plan (RESP) and First Home Savings Account (FHSA)

The TFSA, RESP and FHSA are not recognized as tax-exempt accounts in the U.S.:

Income and gains within a TFSA, RESP and FHSA are taxable under U.S. law.
Consider closing the TFSA before moving to avoid complex reporting requirements and potential taxation.
Consider rolling the FHSA into your RRSP before moving to avoid complex reporting requirements and potential taxation.
Consider closing the RESP before moving or transfer the plan’s subscriber to a family member who is a Canadian resident and citizen. See our blog: Cross Border Wealth Management: Navigating your RESP

Key Consideration: Consult with a Cardinal Point cross-border tax advisor to develop a strategy for managing Canadian retirement accounts post-move.

Investment and Financial Accounts

Non-Registered Investment Accounts

Unrealized capital gains accrued before your move are subject to the Canadian departure tax, while gains after becoming a U.S. resident are taxed by the U.S. Obtain valuations of your investments as of your move date to distinguish between Canadian and U.S. tax obligations as well as to assist in quantifying your Canadian “exit” tax exposure Work with Cardinal Point on strategies to mitigate this “exit” tax.

Moving from Canada to the U.S.: What to do with your Canadian dollar investments

Currency Considerations

Fluctuations between the Canadian dollar (CAD) and U.S. dollar (USD) can impact your finances. Consider converting CAD to USD when favorable or maintaining dual-currency accounts to manage exchange rate risk.

Key Consideration: A Cardinal Point cross-border financial advisor experienced in cross-border transitions can help optimize your investment strategy and currency management.

Real Estate Holdings

Primary Residence

Selling your Canadian primary residence before moving can exempt you from capital gains tax under the principal residence exemption.

Rental Properties

If retaining Canadian rental properties:

Report rental income to both Canadian and U.S. tax authorities. For specifics regarding non-resident withholding on Canadian sourced rental income, check out our blog: Understanding the Tax Implications of Leaving Canada.
Be aware of specific withholding tax and compliance requirements in Canada and claim foreign tax credits in the U.S. to prevent double taxation.

Key Consideration: Work with a Cardinal Point cross-border tax advisor to evaluate the financial benefits of keeping versus selling Canadian real estate, considering tax implications and market conditions.

Estate Planning

Wills and Trusts

Review and possibly update your estate planning documents to ensure they are valid under U.S. law and still reflect your current wishes. Also, review beneficiary designations on investment accounts, retirement plans, and insurance policies to comply with U.S. inheritance rules.

Estate Taxes

The U.S. imposes estate taxes on worldwide assets for its residents above $13.99 million USD (for 2025). Understand the current estate tax exemption limits and plan accordingly to minimize potential liabilities. Canadians moving to the U.S. should carefully structure their cross-border estate to minimize exposure.

Key Consideration: Engage with a Cardinal Point cross-border financial advisor and an estate planning attorney familiar with cross-border issues to develop a comprehensive plan.

Health Care Considerations

Unlike Canada’s publicly funded healthcare system, the U.S. operates largely on private health insurance, often provided through employers. Health insurance should be prioritized if you’re moving from Canada to the U.S.

Employer-Sponsored Health Plans: If you’re moving for a job, your employer may provide a health plan. Be sure to review coverage details, including deductibles and out-of-pocket costs.
Marketplace/Private Insurance: If you’re self-employed or don’t have employer coverage, explore Affordable Care Act (ACA) plans via the Health Insurance Marketplace or private insurers.
Medicare: If you are 65 or older and have lived in the U.S. long enough to qualify, you may be eligible for Medicare. However, if you’re newly arriving in the U.S., you may need private insurance coverage to bridge you until you are eligible for Medicare.

Key Consideration: Unlike Canada, where health care is funded through taxes, in the U.S., you must pay for private insurance or employer-sponsored plans. Work with a Cardinal Point cross-border financial advisor to factor this into your financial planning when estimating your cost of living.

Cross-Border Tax Compliance and Reporting Obligations

Moving to the U.S. does not eliminate all Canadian tax filing obligations. You must ensure compliance with tax laws in both countries.

Canadian Tax Filing Requirements Post-Move

If you have Canadian assets, such as rental properties, investments, or business interests, you may still have tax obligations in Canada.
Departure Tax: When leaving Canada, you may be subject to deemed disposition on certain capital assets, triggering capital gains tax.
If you receive income from Canada post-move, such as rental income, dividends, or pensions, you must file a Canadian non-resident tax return (T1135 for foreign asset reporting).

U.S. Tax Reporting Requirements

As a U.S. tax resident, you will be taxed on your worldwide income and must file annual IRS tax returns. This includes:

Form 1040 (U.S. individual income tax return).
FBAR (Foreign Bank Account Report) if your Canadian (or other non-U.S.) financial accounts exceed $10,000 USD at any time in the year.
FATCA (Form 8938) if your foreign (non-U.S.) financial assets exceed $100,000 USD at year-end (or $150,000 at any point during the year, for married individuals filing jointly).

Note: Unlike Canada where most provincial tax is filed in concert with CRA tax filing, U.S. States require a separate State income tax return. Some States (like California) do not honor the Canada-U.S. Tax Treaty), therefore proactive planning is a necessity.

Key Consideration: The Canada-U.S. Tax Treaty prevents double taxation through foreign tax credits. However, tax treaty benefits must be applied correctly, so working with a Cardinal Point cross-border tax advisor is highly recommended.

Retirement Accounts and Social Security Considerations

Canada Pension Plan (CPP) and Old Age Security (OAS)

If you have contributed to the Canada Pension Plan (CPP) or qualify for Old Age Security (OAS), you may still be eligible to receive benefits while living in the U.S.

CPP Benefits: The U.S.-Canada Totalization Agreement ensures that Canadian workers who relocate to the U.S. can still qualify for CPP benefits, even if they haven’t contributed for the full eligibility period.
OAS Clawback: As a U.S. resident, there is no OAS clawback reducing or eliminating your OAS benefits due to income thresholds.

Key Consideration: U.S. residents receiving CPP or OAS must report it on their U.S. tax return, but a tax treaty reduces or eliminates double taxation. Discuss with a Cardinal Point cross-border tax advisor to factor in your entitlements to CPP and OAS in your long-term planning.

U.S. Social Security Benefits

If you have worked in the U.S. and contributed to Social Security, you may qualify for U.S. Social Security benefits.
The U.S.-Canada Totalization Agreement allows for combined work credits between CPP and Social Security to qualify for retirement benefits.

Key Consideration: Work with a Cardinal Point cross-border financial advisor to determine how your Canadian and U.S. benefits interact to optimize your retirement income.

Summary: Key Steps for Canadians Moving to the U.S.

Determine Your U.S. Visa Status: Secure a visa, such as a TN, H-1B, or Green Card.
Plan for Canadian Departure Tax: Assess capital gains tax obligations before leaving Canada inclusive of tax strategies to mitigate potential exposure.
Cut Canadian Tax Residency: Close Canadian accounts, sell property, and document your move. This is not an exhaustive list. Make sure you speak with a Cardinal Point cross-border financial advisor.
Optimize Retirement Accounts: Understand how RRSPs/LIRAs, TFSAs, and FHSAs are treated from a cross-border tax perspective.
Secure U.S. Health Insurance: Research employer-sponsored, private, or ACA options.
Manage Cross-Border Investments: Consider tax-efficient strategies before transitioning accounts.
Comply with U.S. and Canadian Tax Rules: Stay current on tax filings, FBAR, and FATCA requirements.
Review Estate Planning: Ensure wills, trusts, and beneficiary designations align with U.S. laws.

Moving from Canada to the U.S. requires careful investment, tax, financial, and legal planning performed in a coordinated fashion. Work with cross-border financial advisors to optimize tax efficiency, protect wealth, and avoid unnecessary penalties. Cardinal Point Wealth Management specializes in helping individuals navigate the complexities of cross-border financial planning. Learn More

Cross-Border Wealth Management: RESP Guide – Free eBook

July 24, 2024 By Cardinal Point Wealth

Cross-Border College Funding: Maximizing Your RESP Amid U.S. Relocation and Education Plans – An eBook Guide

Navigating the financial landscape for college funding is a top priority for many parents and grandparents, especially as tuition costs continue to rise. The Registered Education Savings Plan (RESP) is an effective tool for Canadian families. However, what happens if your family’s situation changes, such as relocating to the U.S. or your child decides to attend a university there? Our ebook, “Cross Border Wealth Management: Navigating your RESP,” is designed to address these critical questions and more.

This comprehensive guide delves into the complexities of managing RESPs in a cross-border context. We explore various scenarios to provide clarity and actionable strategies:

Case Study Scenario #1: The RESP subscriber remains in Canada while the beneficiary attends a Canadian post-secondary institution. This straightforward situation allows contributions, government grants, and earnings to grow tax-free within the RESP. We detail the optimal withdrawal strategies based on the beneficiary’s tax status and potential AIP contributions to an RRSP.
Case Study Scenario #2: The RESP subscriber becomes a U.S. resident while the beneficiary studies in Canada. The U.S. views the RESP as a taxable brokerage account, requiring annual taxation on capital gains and dividends. We discuss the pros and cons of transferring RESP responsibilities to a Canadian resident to alleviate these tax burdens.
Case Study Scenario #3: Both the subscriber and beneficiary are U.S. residents, with the beneficiary planning to study in the U.S. This scenario requires careful tax planning, as all RESP income must be reported and taxed in the U.S., potentially increasing tax liability. We highlight the importance of understanding FBAR/FinCEN 114 and Form 8938 reporting requirements.

Our ebook provides detailed guidance and real-world examples to help you navigate the challenges of cross-border financial planning. From understanding Canadian tax credits to managing U.S. tax reporting and handling RESP withdrawals, this guide is essential.

Download ‘Cross Border Wealth Management: Navigating Your RESP‘ today to enhance your college savings strategies and secure your family’s financial future.

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