A 2026 plain-English comparison of the two accounts, and what actually happens to each one when you cross the border.

The 401(k) and the RRSP are often called each other’s equivalents, and in spirit they are. Both are tax-deferred retirement accounts: you contribute pre-tax dollars, the money grows without annual tax, and you pay tax when you withdraw in retirement. But the details differ, and for anyone whose life crosses the border, the differences matter.

Here is a plain comparison, followed by what actually happens to each account when you move.

The side-by-side

• Country: the 401(k) is a U.S. employer plan; the RRSP is a Canadian individual plan you can open yourself.
• Employer match: 401(k)s frequently include an employer match; RRSPs generally do not, though some employers offer group RRSPs with a match.
• 2026 contribution limit: the 401(k) employee deferral limit is US$24,500, plus a US$8,000 catch-up at age 50 or older. The RRSP limit is 18 percent of prior-year earned income up to an annual dollar cap, reduced by any pension adjustment.
• Tax on growth: both defer tax on growth while the money stays in the account.
• Withdrawals: both are taxed as ordinary income when withdrawn; both apply early-withdrawal consequences before retirement age.
• Conversion in retirement: a 401(k) is often rolled to an IRA; an RRSP is converted to a RRIF by the end of the year you turn 71.

Contribution limits are indexed and change in most years. The figures above are the 2026 limits, so confirm the current year’s numbers before you contribute.

What happens to your 401(k) when you move to Canada

You generally keep your 401(k) when you move to Canada. It does not disappear, and it does not automatically become an RRSP. The Canada-U.S. treaty allows the account to keep growing tax-deferred while you are a Canadian resident, so the most common and often best choice is simply to leave it in place and plan the withdrawals carefully. We cover this in depth in our guide to managing your 401(k) when moving to Canada.

You can, in specific circumstances, move 401(k) funds into an RRSP under a provision of the Income Tax Act, but the mechanics are unforgiving. The withdrawal is taxed in the United States, U.S. withholding applies, and if you are under age 59 and a half a 10 percent early-withdrawal penalty can apply that may not be recoverable as a foreign tax credit. Done without planning, the transfer can be taxed twice. This is a move to run past a cross-border advisor before, not after.

What happens to your RRSP when you move to the U.S.

Your RRSP is well protected by the treaty. You can generally keep it, and its growth continues to be tax-deferred for U.S. purposes when the treaty election is in place. You will, however, have new U.S. reporting to attend to, and any withdrawals have both Canadian withholding and U.S. tax to coordinate. We cover this in detail in our guide to your RRSP, TFSA and FHSA when you move to the U.S..

Which is better?

Neither is better in the abstract; they are tools for the country you are in. The real question for cross-border families is not which account to prefer but how to coordinate the ones you already hold, so that contributions, growth, and withdrawals are efficient under both tax systems. That is a planning question, not a product one.

Frequently asked questions

Is a 401(k) the same as an RRSP?

They are close equivalents. Both are tax-deferred retirement accounts taxed on withdrawal. The main differences are that the 401(k) is a U.S. employer plan that often includes a match, while the RRSP is a Canadian individual plan with contribution room based on your income.

Can I transfer my 401(k) into an RRSP?

Sometimes, under a specific provision of the Income Tax Act, but the transfer is taxed in the U.S., subject to withholding, and can trigger an early-withdrawal penalty if you are under 59 and a half. Without careful planning it can be taxed twice, so get cross-border advice first.

Do I lose my 401(k) or RRSP if I move?

No. You generally keep both. The treaty allows each to keep growing tax-deferred across the border, but you take on new reporting and need to coordinate withdrawals across both tax systems.

Talk to a cross-border specialist

If you hold a 401(k), an RRSP, or both, and your life crosses the border, the accounts are easier to coordinate together than separately. Sartorial Wealth can map out the tax-efficient path for your situation.

Holding a 401(k), an RRSP, or both?

We can map how your accounts interact across both tax systems and sequence contributions and withdrawals accordingly. Book a call with Sartorial Wealth, a dual-registered cross-border wealth manager: Book a call

Sartorial Wealth is a cross-border wealth management practice serving families and individuals who live, work, or invest across the Canada-U.S. border. This article is for general information only and reflects rules and figures current as of 2026. It is not tax, legal, or investment advice. Cross-border rules are complex, change over time, and depend on your specific facts and residency. Please speak with a qualified cross-border advisor before acting.