What Happens to Your 401(k), IRA and Roth IRA When You Move to Canada?

Moving from the United States to Canada does not automatically mean you need to close, cash out, or transfer your US retirement accounts.

Accounts such as a 401(k), traditional IRA, and Roth IRA can have different cross-border tax consequences once you become a Canadian resident.

The right approach depends on the type of account, your residency status, whether you continue making contributions, how distributions are taken, and how the US–Canada tax treaty applies.

For many people, the most important planning happens before the move.

What Happens to Your 401(k) When You Move to Canada?

In many cases, a 401(k) can simply stay where it is: moving to Canada does not by itself require the account to be liquidated or transferred.

What changes is how the account is treated once you become a Canadian resident, including how future distributions are taxed.

However, the account may become subject to additional cross-border considerations, including:

• how Canada treats future distributions
• how the United States taxes those distributions
• whether treaty relief applies
• whether the financial institution will continue servicing a Canadian resident
• whether future contributions remain possible

The Canada–US tax treaty contains rules dealing with pensions and retirement arrangements, including how certain pension distributions can be taxed between the two countries.

Before changing or liquidating a 401(k), it is often worth reviewing whether simply keeping the account in the United States is more appropriate.

How Are 401(k) Distributions Taxed in Canada?

401(k) distributions received by a Canadian resident are generally taxable in Canada as pension income when received.

The United States can also tax those distributions, but under Article XVIII of the Canada–US tax treaty, US withholding tax on periodic pension payments is generally limited to 15% instead of the standard non-resident rate.

Canada generally provides foreign tax credit or deduction relief so the same income is not fully taxed twice, subject to applicable domestic and treaty rules.

Lump-sum withdrawals may be treated differently than periodic pension payments, and the result can depend on the facts of the account, the type of payment, and the timing of the distribution.

What Happens to Your IRA When You Move to Canada?

A traditional IRA can also generally remain in the United States after a move to Canada.

The tax treatment of future distributions can involve both countries.

Under the US–Canada tax treaty, pension income can generally be taxed in the country of residence, while the source country may also retain limited taxing rights in certain circumstances.

For periodic pension payments, the treaty may limit source-country withholding in some cases.

That does not mean every IRA distribution receives identical treatment. Lump-sum distributions, rollovers, account type, timing, and residency can affect the result.

Because of that, an IRA should not be moved, converted, or withdrawn solely because you are changing countries without first understanding the cross-border consequences.

Can You Keep a Roth IRA After Moving to Canada?

In many cases, a Roth IRA can be kept after moving to Canada, but Canada does not treat every Roth IRA exactly the same way as the United States, so these accounts deserve special attention.

The Canada Revenue Agency recognizes that the US–Canada tax treaty can provide favorable treatment for qualifying Roth IRAs.

In general, a Canadian resident who owns a Roth IRA may be able to elect under the treaty to defer Canadian taxation on income accrued inside the Roth IRA.

However, the rules become particularly important once the individual becomes a Canadian resident.

Why New Roth IRA Contributions Matter

CRA guidance states that, in general, an individual resident in Canada who owns a Roth IRA should avoid making additional contributions after becoming a Canadian resident if they want to preserve treaty treatment.

Under the treaty, a Roth IRA can qualify as a pension for treaty purposes, but additional contributions made after Canadian residency begins can affect that treatment.

This is one of the clearest examples of why pre-move planning matters: an action that is normal from a US-only perspective can create different consequences after Canadian residency begins.

The Roth IRA Treaty Election

CRA guidance describes an election that can allow a Canadian resident to defer Canadian taxation on income accrued inside a qualifying Roth IRA.

The election is technical and should be considered carefully. Timing, prior contributions, distributions, and the specific account history can all matter.

If you are moving to Canada with a Roth IRA, the account should be reviewed before assuming that its US tax-free treatment automatically carries over without additional steps.

Does the US–Canada Tax Treaty Protect Retirement Accounts?

The Canada–US tax treaty contains specific provisions dealing with pensions and retirement arrangements.

These provisions can help coordinate how qualifying retirement income and retirement-plan growth are treated between the two countries.

The treaty can address areas such as:

• taxation of pension distributions
• deferral of taxation inside certain retirement arrangements
• cross-border retirement-plan contributions in certain employment situations
• coordination between the two tax systems

However, treaty treatment is not automatic for every account or transaction.

The type of account, residency status, contribution history, distribution type, and timing can all change the result.

Should You Cash Out Your 401(k), IRA or Roth IRA Before Moving?

Not automatically.

Cashing out a retirement account before moving can create immediate US tax consequences and may also affect long-term retirement planning.

For some people, keeping the account in the United States may be appropriate. For others, a rollover, distribution, or restructuring may deserve consideration.

The correct decision depends on factors such as:

• your age
• the type of retirement account
• your expected move date
• your future country of residence
• your expected retirement income
• whether you expect to return to the United States
• whether you will continue earning US income
• the financial institution holding the account

The key point is that liquidation should not be treated as the default solution simply because you are moving to Canada.

Can Your US Brokerage or Retirement Provider Keep Serving You in Canada?

This is not purely a tax question.

Some US financial institutions have restrictions on servicing clients who become residents of another country.

A firm may limit trading, restrict new purchases, require a change of advisor, or in some cases ask the client to move the account.

This can create an operational issue even when the tax rules themselves do not require the retirement account to be closed.

Before moving, consider asking your financial institution whether it can continue servicing you after you become a Canadian resident.

If not, you may need to evaluate other institutions that can legally serve clients on both sides of the border.

What About Continuing to Contribute After Moving to Canada?

Contribution rules depend heavily on the type of plan, employment arrangement, earned income, and residency.

A person who continues to earn qualifying US employment or self-employment income may have different options than someone who stops earning US-source income entirely.

For Roth IRAs specifically, additional contributions after becoming a Canadian resident can be especially important because they may affect treaty treatment.

Do not assume that contribution rules remain unchanged after the move.

What Should You Review Before Moving to Canada?

Before changing residency, consider reviewing the following:

• all 401(k), IRA and Roth IRA accounts
• current account balances
• beneficiary designations
• planned contributions
• planned rollovers or conversions
• planned distributions
• whether your financial institution serves Canadian residents
• whether a Roth IRA treaty election may be relevant
• your expected Canadian residency start date
• your expected US and Canadian income after the move

Retirement accounts should be reviewed as part of the broader move, not in isolation.

Your residency date, employment, property, investments, and other financial assets can all interact with the retirement-account analysis.

Common Retirement Account Mistakes When Moving to Canada

• assuming every US retirement account receives identical Canadian tax treatment
• cashing out an account solely because of the move
• making new Roth IRA contributions after Canadian residency begins without reviewing treaty consequences
• assuming US tax-free treatment automatically means Canadian tax-free treatment
• ignoring financial-institution residency restrictions
• making a rollover or conversion without reviewing cross-border consequences
• waiting until after the move to review retirement accounts

When Should You Get a Cross-Border Retirement Account Review?

A review may be particularly useful if you:

• are planning to move from the United States to Canada
• already live in Canada and still hold US retirement accounts
• have a Roth IRA
• are considering a rollover, conversion, or distribution
• expect to continue working in the United States after moving
• have significant retirement assets
• are unsure whether your financial institution can continue serving you

For a broader overview of your filing obligations after moving, read our guide on whether US citizens living in Canada still have to file US taxes.

If you need help reviewing the broader cross-border consequences of your move, see our US tax filing guidance for US citizens living in Canada.

Frequently Asked Questions

Can I keep my 401(k) if I move to Canada?

In many cases, yes. Moving to Canada does not automatically require a 401(k) to be closed or transferred. Tax treatment, future distributions, and the financial institution's ability to serve Canadian residents should still be reviewed.

Can I keep my traditional IRA after moving to Canada?

In many cases, an existing traditional IRA can remain in the United States. Future distributions may have tax consequences in both countries, subject to domestic law and treaty provisions.

Is a Roth IRA tax-free in Canada?

A qualifying Roth IRA may receive favorable treatment under the US–Canada tax treaty, but specific requirements can apply. CRA guidance discusses a treaty election for deferral of Canadian taxation on income accrued inside certain Roth IRAs.

Can I continue contributing to a Roth IRA after moving to Canada?

This requires particular caution. CRA guidance states that additional contributions made after becoming resident in Canada can affect the Roth IRA's treaty treatment. The account should be reviewed before making new contributions.

Should I cash out my retirement accounts before moving to Canada?

Not automatically. A withdrawal can create immediate tax consequences and may not be the best long-term option. The appropriate strategy depends on the account type, residency, timing, and the individual's broader financial situation.

Important: This article provides general educational information and is not individualized tax, legal, investment, or financial advice. Retirement-plan treatment depends on each person's facts, account history, residency, transactions, and applicable law.

Official Resources

• Canada Revenue Agency — Income Tax Folio S5-F3-C1, Taxation of a Roth IRA
• Government of Canada / Department of Finance — Canada–United States Income Tax Convention (Article XVIII)
• Internal Revenue Service — Tax information for US citizens and residents abroad