US/Canada Cross Border Investments - Implications of Employee Mobility

Transcription

1 US/Canada Cross Border Investments - Implications of Employee Mobility

2 Instructions Dialing instructions will appear once you connect on the web. 15 minute Q & A at end of session. Use the chat feature to type a question. Need help? Call Two continuing education credits will be issued to CERP/CGMP designees ( info@cerc.ca for more information).

3 Thank You to Our Sponsor

4 Agenda Welcome & Introductions Presentation Conclusion Q&A

5 Presenter Presenter: Elizabeth Hurly, CIM Financial Advisor ext

6 Liz has over 25 years of experience in the investment industry including institutional money management. After a tremendous career managing institutional money, Liz turned her attention to working with private clients and assisting them with the management of their investments, working for a major bank-owned dealer before joining Bernardine and the independent arm of Raymond James. Liz has obtained her Chartered Investment Manager (CIM ) designation and continues to enhance her experience and expertise, and is currently working on attaining the designation of Certified Financial Planner (CFP )

7 Presenter Presenter: Bernardine Perreira, CFP, CIM Financial Advisor ext

8 Bernadine has over 25 years of diverse business experience that includes specializations in financial planning and investment management. She has nearly a decade of experience in the financial services industry, having worked with a bank-owned brokerage house, before establishing her own independent practice at Raymond James Ltd. Bernardine helps clients with their investments on both sides of the Canada/U.S. border, and is an Investment Advisor Representative and is Series 7 and Series 63 registered with Raymond James (USA) Ltd., a broker-dealer subsidiary registered with the US Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority (FINRA), and Securities Investor Protection Corporation. A firm believer in continuing education, Bernardine obtained her Certified Financial Planner (CFP ) and Chartered Investment Manager (CIM ) designations, and she is a registered representative with IIROC and also insurance licensed by FSCO.

9 Employee benefit issue retirement & investment accounts Webinar- Canada - U.S. Cross Border Mobility Implications Providing Insights and Support for Employees CERC May 31, 2017 Presenters: Elizabeth Hurly, Financial Advisor Bernardine Perreira, Financial Advisor Perreira Hurly Wealth Advisory of Raymond James 9

10 Employees Moving to new jurisdiction subject to new investment & tax rules U.S. securities legislation planning Cross border estate Canadian securities legislation Canadian tax regulations What s allowed? U.S. tax regulations What s taxable? What tax shelters are available to cross border executives? Providing insights and pre-planning with employees is key. 10

11 Cross border mobility implications Assignments for Americans to work in Canada What investment considerations for employees? American citizens required to file U.S. tax and Canadian tax what implications? Structure of investment portfolios and type of securities important. Canadian mutual funds considered passive foreign investment corporations by IRS. Require extra reporting, extra costs best to be avoided. Better to invest in individual stocks, bonds and exchange traded funds in non-registered accounts U.S. Securities legislation restricts Canadian residents from purchasing or reinvesting U.S. mutual funds in their investment accounts. Accounts may be suspended from activity. 11

12 Cross border mobility implications Assignments for Canadians to work in the U.S. What investment considerations for employees? Canadians working in U.S. required to file U.S. tax Structure of investment portfolios and types of securities important for future mobility of assets. May be best to invest in individual stocks or exchange traded funds. Securities regulations restrict residents in the U.S. from having investment accounts in Canada (does not include RRSPs); must move investment accounts to U.S. Canadians may continue to hold RRSPs however, some states do not recognize the Canada/U.S. tax treaty for retirement plans and any income earned in such plans are taxable annually Tax Free Savings Accounts (similar to Roth IRAs) not considered retirement assets; not covered by the tax treaty and are subject to tax on income earned. Best to close these accounts. 12

13 Mobility impact on retirement accounts What considerations? When an employee notifies U.S. brokerage firm of Canadian address, IRA accounts may become orphaned they are typically given 30 days notice to move assets or receive a check for the proceeds If clients receive a check, they must deposit to another IRA (with a specially licensed brokerage firm) within 60 days or face withdrawal and other tax penalties Client may transfer IRA to an RRSP but this is complicated and may not have a good tax outcome only works in very special situations Client may not roll an RRSP into an IRA Cannot contribute to IRA if not earning income in U.S. RRSPs contribution based on previous year s earned income in Canada U.S. persons relocating to Canada cannot contribute to these programs until second year resident in Canada. 13

14 Checklist for mobile executives American Moving to Canada IRA may need to engage with a specially licensed brokerage firm that can manage cross-border assets 401ks does it make sense to continue to hold or rollover to IRA Investment Accounts US Accounts non-residents not allowed to purchase or reinvest in US mutual funds. Canadian Accounts Avoid purchase of Canadian mutual funds - increase tax filing costs and complications RRSPs Can begin to contribute after first year income earned. Canadian Moving to U.S. RRSPs check to see if the state they are moving to recognizes the Canada/US retirement account tax treaty. If not, may need to restructure investments to be more tax efficient TFSA tax sheltered savings accounts not recognized under Canada/US tax treaty. No tax benefit to hold. Investment Accounts Canadian investment accounts must be closed and moved to a U.S. brokerage. Structure of investment portfolios important for future mobility. U.S. mutual funds could present issues. Set up IRA and 401k accounts 14

15 Case study 1 American - Canadian Citizen/Resident 20 years+ Returns to U.S. Executives and professionals traverse the Canada/U.S. border to pursue career opportunities. This can sometimes lead to having their investment assets scattered between varying plans, firms and advisors. The Background William is a medical specialist who completed his medical training in Canada and launched his career in Montreal. After several years working for the pharmaceutical industry in Montreal and Toronto, he received a plum job offer in Dallas. William did a good job focusing on RRSP contributions over the years and, once those contributions were maximized, started to build a sizeable non-registered investment account. He also had a small IRA with a Florida based advisor. 15

16 Case study 1 American Citizen- Canadian Citizen/Resident 20 years+ Returns to U.S. The Issue When William decided to relocate, he could leave his RRSP investments with his Canadian advisor but would have to move his non-registered investment accounts to a U.S. brokerage. He had his primary investment advisory relationship and the majority of his wealth with his Canadian advisor. Now this relationship would be partially severed. The Solution Licensed both in Canada and the U.S. through Raymond James (USA) Ltd., we were able to help William create a disciplined investment strategy and financial plan with his North America wide assets to help him achieve his financial goals. With the multi-currency platform, William is able to retain Canadian assets in Canadian currency to wait for a more favourable time to convert to U.S. dollars. He can also hold an IRA with us. 16

17 Case study 2 Canadian Citizen/U.S. Resident Green Card Holder -- plans to return to Canada for Retirement Executives and professionals traverse the Canada/U.S. border to pursue career opportunities. This can sometimes lead to having their investment assets scattered between varying plans, firms and advisors. The case study below illustrates how the Private Client Division of Raymond James (USA) Ltd. has helped. The Background Margaret is a former C-Suite executive who spent the latter part of her career in the U.S. She continues to serve on corporate boards in the U.S. and Canada. She maintains her residence in the U.S. for tax purposes. Margaret built a sizeable investment account and receives compensation in the form of DSUs from the boards she serves on. Her investment assets were held with a Canadian advisor and her other accounts were with a U.S. advisor. Annuities, pensions and other assets are held separately. 17

18 Case study 2 Canadian Citizen/U.S. Resident Green Card Holder-plans to return to Canada for Retirement The Issue Margaret accumulated assets over the years; however, with her assets being held at many financial institutions both in Canada and the U.S., she could not determine if she had enough to retire completely and maintain her current lifestyle. Margaret wanted to consolidate her investment assets as she had difficulty assessing progress towards her financial goals with no cohesive plan in place. The Solution We were able to consolidate her North America wide holdings and create a financial plan to help her achieve clarity around her financial goals. With the multi-currency platform, Margaret is able to retain Canadian cash and assets in Canadian currency. Working together with her tax and legal advisors, we are working on forecasts and strategies for repatriation. 18

19 How we help We offer the following: Through Raymond James (USA) Ltd., clients have the ability to hold both Canadian and US investments in either Canadian dollars or US dollars, thus avoiding the need to convert currencies. Advice on both Canadian and US securities. Advisors properly licensed and regulated in both countries. Assistance in dealing with cross-border issues, such as PFIC rules, Retirement account rollovers, Restricted Stock sales and Employee Stock Option plans. Design portfolios using stocks and exchange traded funds thereby eliminating PFIC reporting. A single point of contact for a holistic view of cross border accounts both registered/qualified and non-registered. 19

20 How we help Some of the accounts we manage for clients include: IRAs for Americans living in Canada IRAs for Canadians who worked in the U.S. and moved back to Canada RRSPs and RRIFs for Canadians living in the U.S. Investments for Americans wanting Canadian securities Investment accounts for U.S. resident children of Canadian-resident parents Portfolio services in both currencies We work closely with client s tax and legal advisors as well we keep a network of cross border specialists in these fields 20

21 Who we help Canadian citizens Working and/or living in the United States Working and/or living in Canada Returning home from working and/or living in the United States Retired in United Sates Looking to retire in the United States Executives and professionals working and living on both sides of the border Inheriting money from a relative in the United States Requiring generational planning for relatives living in the United States Requiring oversight of money invested in Canadian-based accounts (RRSPs, pensions, non-registered accounts) and U.S.-based accounts (IRAs, 401ks, pensions, trusts, taxable accounts) 21

22 Who we help American Citizens Working and/or living in Canada Working and/or living in the United States Returning home from working/and or living in Canada Executives and professionals working and living on both sides of the border Inheriting money from a relative In Canada Requiring generational planning for relatives living on both sides of the border Requiring oversight of money invested in Canadian-based accounts (RRSPs, pensions, non-registered accounts) and U.S.-based accounts (IRAs, 401ks, pensions, trusts, taxable accounts) 22

23 Wrap up Q & A

24 Future CERC Events Regional Events Watch our website for upcoming events Toronto Central Summer Social- June Ottawa Region CERC- 35 th Year Anniversary June Vancouver Immigration Symposium June Toronto Immigration Symposium- June CERC 2017 Conference Calgary, Alberta- Sept

25 Thank You to Our Sponsor The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.