I'm currently working in Canada and my employer offers a program where they match my RRSP contributions up to a certain percentage of my salary. Should I start contributing to RRSP even though I currently have no plans for retiring in Canada? For the sake of this question presume I will move out of the country permanently in five years.
asked Jan 26, 2018 at 0:30
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Related: Tax on money withdrawn from Roth 401(k) and Roth IRA when living outside the United States and over 59.5-year-old– Franck DernoncourtCommented Jan 26, 2018 at 1:01
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1 Answer
If your employer is matching your RRSP contributions you should definitely take advantage. It's like getting a 100% rate of return if they match it completely, even if there is no tax benefit.
Without that match the benefits are a bit more doubtful. You get the tax rebate back for your contributions, but you pay tax when you withdraw. If you are not resident when you withdraw you pay withholding tax. If you are paying a fairly high tax rate you may end up getting more in rebate than you pay in withholding. And in any case you get tax free growth while you are in Canada. So most people would come out slightly ahead.
Note that wherever you move to may not recognize RRSP as tax exempt. Only the US has a deal to recognize them as far as I know. On the other hand they will not charge you tax on money you withdraw from the RRSP.
answered Jan 26, 2018 at 3:50
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1"If you are not resident when you withdraw you pay withholding tax" "Note that wherever you move to will not recognize RRSP as tax exempt." These statements are not necessarily true - they depend on what country the OP moves to. For example, Canadians who move to the US can enjoy a deferral of income earned in their RRSP's, just as Americans living in Canada can enjoy a deferral of income in 401k plans. Of course, tax treaties today may not match tax treaties in the future, so this is not a certainty. Commented Jan 26, 2018 at 13:47