Hi Peace,
Yes, a non-resident of Canada may generally continue to hold an existing RRSP. Opening a new RRSP as a non-resident is not prohibited under the Income Tax Act, provided you have available RRSP contribution room. However, in practice, many Canadian financial institutions restrict non-residents from opening new investment accounts because of securities, compliance, and “know-your-client” rules. Therefore, whether you can open a new RRSP will depend on the policies of the specific institution.
You should also be careful about making new RRSP contributions while non-resident. RRSP room is generally based on earned income from prior years, and if you do not have Canadian earned income while non-resident, you may not be generating new RRSP room. Overcontributions can result in penalty tax.
For an RESP, the key restriction is that the beneficiary must be resident in Canada and must have a valid SIN when contributions are made to the RESP.
Therefore, if the child/beneficiary is also non-resident of Canada, new RESP contributions would generally not be permitted. If the beneficiary is resident in Canada, opening or contributing to an RESP may be possible, subject again to the financial institution’s own account-opening rules. RESP contributions are not tax-deductible.
With respect to consolidating funds and U.S. reporting, you should obtain advice from a U.S. tax professional before making investment changes. Canadian mutual funds and ETFs can create PFIC reporting issues for U.S. taxpayers. Holding U.S.-domiciled investments may simplify U.S. reporting in some cases, but there may be Canadian tax, withholding tax, estate tax, currency, and investment-account restrictions to consider.
In summary:
- You may generally keep your existing RRSP as a non-resident.
- Opening a new RRSP may be legally possible, but many institutions may not allow it for non-residents.
- You should only contribute to an RRSP if you have available contribution room.
- An RESP generally requires the beneficiary to be resident in Canada at the time contributions are made.
- Speak with both the Canadian financial institution and a cross-border tax advisor before transferring or restructuring the investments.
Best regards,
SOCIAL CONNECT