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Canadian Roth equivalent - Tax free saving account

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  • Canadian Roth equivalent - Tax free saving account

    Hi team,

    I am a Canadian and finishing up fellowship here in USA and plan to stay.

    So far, all I have been doing is the roth IRA for my wife and I. Starting attending job next year. Planning to max my 401k, pay off the rest of my loans aggressively (120k with 3.4 interest - I know its low interest but I hate the loan : also Canadian dollars, so exchange rate has been awesome), and save for down payment for a house.

    However, i came across TFSA and wondering if anyone has experience with it. The maximum limit is 52,000 dollars and apparently can put the whole 52k in at one time.

    Now with this information, I am thinking of prioritizing the TFSA after the 401K.

    I am curious if this will mess with my USA tax and if it is a good idea to mix Canada with USA at all.

  • #2
    The Tax free savings account (TFSA) is a good investment plan for those of us living in Canada, though the contribution limits are too low to be really useful for most high income families (maximum contribution $5500 per year per adult over age 18).

    https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/who-open-a-tfsa.html

    The above link is from Revenue Canada's website regarding contribution rules. Basically, non-resident Canadians are excluded, or else pay a substantial tax penalty while living outside Canada.

    If you are considered a non-resident of Canada while living and working in the USA, and plan to stay in the USA, the TFSA is probably not for you.

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    • #3
      Thanks for the reply and link.

      There goes my Megaish Roth IRA. Deep down, I know it is too good to be true. I was thinking I can squeeze in some of the ties but probably not worth it.

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