What Should You Do With a 401(k) if You Move Back to Canada?

Andrea Thompson on why many Canadians should leave their 401(k) exactly where it is.

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What mistakes do you commonly see? And let’s, uh, first off focus on people who’ve come back to Canada, and let’s say they have a 401k, cause that’s the question that you hear often asked.

I think the mistake is that you think you need to do something and that people are always in a hurry to do something. A 401k is probably the best account to not do something with because the 401k is coming from a pension. Um, it, it is governed really well in the United States by a program called ERISA, and you can leave it there as long as you want.

You don’t, you’re not gonna get kicked out. Uh, you can put a Canadian address on file. I’ve seen no issues with 401ks, but the thing that people don’t realize is they’re eligible for Canadian pension income splitting at retirement. So that is a really cool feature that often people aren’t aware of. Um, and it has some great estate planning benefits as well.

So I would say from that standpoint, unless you’re desperate to get your assets out of the United States, which in this day and age, honestly, a lot of people are, there’s a lot of smart planning decisions you can make around absolutely doing nothing with your 401k. That being said, making sure you have the proper asset allocation in the account and sort of a more of a set-it-and-forget-it mentality is always best for assets in a country that you are not resident.