Moving to Canada with a ROTH IRA: What You Need to Know

Written by Carson Hamill CIM®, CRPC™, FCSI®, Associate Portfolio Manager & Assistant Branch Manager & Dean Moro BComm, CIM®, CRPC™, Associate Portfolio Manager

When Americans head north to settle in Canada, their retirement accounts often move with them. And for many, one big question quickly surfaces: “What happens to my Roth IRA when I become a Canadian resident?”

The answer matters. When processed correctly, your Roth IRA can maintain its tax-free status. If done incorrectly, you could be facing a very different reality with respect to the Canada Revenue Agency (CRA).

Moving to Canada with a Roth IRA: What Happens?

In the United States, a Roth IRA is simple: contribute with after-tax dollars, let it grow tax-free, and enjoy tax-free withdrawals in retirement.But once you move to Canada, the CRA doesn’t automatically see it the same way. Without taking the proper steps, Canada may treat growth and withdrawals from your Roth IRA as taxable—even though the IRS sees them as tax-free.The good news? There is a way to keep your Roth’s growth and income tax deferred.

The One-Time Treaty Election Form

What Is It?

The Canada–U.S. Tax Treaty includes a provision that allows Canadian residents to preserve their Roth IRA’s U.S. tax-free status. To do this, you must file a one-time treaty election with the CRA.

Why Is It Important?

If the election is not filed on time, Canada may tax your Roth IRA just like a regular investment account. That means both the growth inside the account, and subsequent withdrawals down the road, could be deemed taxable.

With the proper election filed, your Roth keeps its intended benefits: tax-free growth and tax-free withdrawals (once qualified).

When Does It Have to Be Filed?

Timing is critical. The election must be filed with your first Canadian tax return after you become a tax resident of Canada. Typically, that tax return is due April 30th of the year after you move to Canada. If you miss the deadline, the road gets much more difficult.

What If You Miss the One-Time Treaty Election?

It happens more often than you might think. Many newcomers to Canada simply aren’t aware of the rule. If the election is missed, the CRA could treat the Roth as a normal taxable account. That means annual growth would be taxed, and withdrawals can be deemed as income.

How to Fix a Missed Election

Contact the CRA

If you’ve missed the deadline to file the one-time treaty election, you can write to the CRA and request that they accept a late election. In the letter, you’ll need to explain your situation and provide details of your Roth account.

CRA Approval

If the CRA accepts your request, your Roth IRA regains its tax-free status for Canadian tax purposes—just as the IRS always intended. But approval isn’t automatic; it’s discretionary. The sooner you act, the better your chances.

What About New Contributions After Moving to Canada?

Here’s the part many people overlook: once you are a Canadian resident, DO NOT CONTRIBUTE to your Roth IRA.

Why? Because while the IRS will still allow contributions (if you have earned income and meet requirements), the CRA does not recognize new contributions the same way. In Canada’s eyes, any new money going into the Roth taints the tax-free status of the account—which can jeopardize its tax treatment.

The safest approach is to stop contributing to the Roth account once you move to Canada. Keep your Roth account intact and let it grow, but don’t add funds to it.

Key Takeaways

• File the treaty election with your first Canadian income tax return to preserve the Roth IRA’s tax-free treatment.
• The election applies per account—file the election for each Roth IRA account you own.
• Do not contribute to your Roth IRA once you have become a Canadian resident. New contributions can jeopardize its tax-free status.
• If you miss filing the election, you can still request relief by contacting the CRA in writing.
• Keep detailed records—statements, contribution history, and correspondence matter.

Final Word

Moving to Canada with a Roth IRA doesn’t have to mean losing its benefits. With planning—and the right paperwork—you can preserve the Roth account exactly as intended: tax-free growth today, tax-free withdrawals tomorrow.For newcomers, it’s one of the most important tax moves you can make.

Next Steps

If you’re planning on moving to Canada and need assistance with your investments, estate planning, and portfolio management, please contact Snowbirds Wealth Management as we specialize in cross-border financial planning and wealth management. We work closely with experienced cross-border lawyers and accountants to ensure you have a team behind you.

About Snowbirds Wealth Management

Gerry Scott is a portfolio manager and founder of Snowbirds Wealth Management, an advisory firm focussed on the cross-border market. Together with Dean Moro and Carson Hamill, associate portfolio managers with Snowbirds Wealth Management, they provide investment solutions for Americans living in Canada, and Canadians residing in the United States. Licensed in both Canada and the US, they provide tailored investment solutions to minimize the tax burden when moving assets across borders.

To schedule an introductory call, please click here.

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