Roth IRA in Canada: What Happens to Your Account When You Move

A 2026 plain-English guide to the treaty election, the deadline most people miss, and the one mistake that cannot be undone.

The Roth IRA is one of the best accounts the U.S. system has ever produced. You pay tax on the way in, the money grows without tax, and qualified withdrawals come out without tax. There are no required minimum distributions during your lifetime. For anyone who expects to be in a decent tax bracket in retirement, it is close to the perfect container.

Then you move to Canada, and a reasonable question arrives. Does any of that survive the border?

The answer is yes, mostly, and it is better news than most people expect. But it is conditional. It depends on one letter you have to file, on a deadline most people have never heard of, and on avoiding one specific mistake that cannot be undone.

The short answer

Canada will generally respect the tax free character of your Roth IRA, but only if you make a one time election under the Canada U.S. tax treaty, and only for as long as you do not make what the rules call a Canadian contribution.

Get the election filed on time and leave the account alone, and your Roth keeps growing without Canadian tax, and qualified distributions stay free of Canadian tax as well.

Miss the election, or make a contribution after you become a Canadian resident, and the account starts working very differently.

Does Canada tax a Roth IRA?

Left to its own devices, Canada would tax the income earned inside a Roth IRA as it accrues, each year, whether or not you took anything out. Canada does not have a domestic equivalent of the Roth, and nothing in Canadian tax law automatically recognises the U.S. treatment.

What rescues it is the Canada U.S. tax treaty. Under the treaty, a Roth IRA can be treated as a pension. That matters, because the treaty allows a Canadian resident to defer Canadian tax on income that accrues inside a pension until it is actually distributed. And because qualified Roth distributions are not taxable in the United States, they generally end up not taxable in Canada either.

So the mechanism is slightly indirect, and worth understanding for what it is. Canada is not saying Roth accounts are tax free. Canada is saying that under the treaty it will not tax the growth until there is a distribution, and that a distribution which the U.S. does not tax is one Canada will not tax either.

That distinction becomes important the moment anything about the account changes.

The election, and the deadline most people miss

The treaty protection is not automatic. You have to claim it.

The Canada Revenue Agency sets out the mechanics in Income Tax Folio S5-F3-C1. The election is a one time, irrevocable letter filed with CRA. It is not a form with a number. It is a letter, and it needs to contain specific things:

• Your name, address, social insurance number and U.S. social security number.
• The name and address of the Roth trustee or custodian, and the account number.
• The date the account was established.
• The date you became a resident of Canada.
• The account balance as at 31 December 2008, or the date you became a Canadian resident, whichever is later.
• Details of your first Canadian contribution, if you have made one.
• A signed statement saying you elect to defer taxation in Canada under paragraph 7 of Article XVIII of the treaty.

And here is the part that catches people. The letter is due on or before your filing due date for the tax year in which you became a resident of Canada.

Not eventually. Not when someone finally asks. For the year you arrive.

A separate election is required for each Roth account you own. If you have three, you file three.

This is the single most common failure we see in this area, and it is almost always innocent. Somebody moves in March, gets through a chaotic year, files a Canadian return the following spring with an accountant who has never seen a Roth, and the letter never gets written. Nobody sends a reminder, because CRA does not know the account exists.

The Canadian contribution problem

The second condition is the one that does permanent damage, and it is worth being precise about.

A Canadian contribution is, broadly, a contribution made to your Roth by you or on your behalf after 2008, at a time when you are a resident of Canada.

Two exceptions are important and genuinely helpful:

• A rollover from one Roth IRA to another Roth IRA is not a Canadian contribution.
• A rollover from a Roth 401(k) into a Roth IRA is not a Canadian contribution.

So consolidating Roth accounts, or moving a Roth 401(k) from a former employer into your own Roth IRA, does not break anything. That is a relief for a lot of people, because tidying up old employer plans is exactly what people do after a move.

But one thing does count, and it surprises almost everybody: a conversion from a traditional IRA, or from a qualified U.S. retirement plan, into a Roth IRA is a Canadian contribution if you are a Canadian resident when you do it.

Read that twice, because it is counterintuitive. A Roth conversion feels like an internal reshuffle of money you already had. Under these rules, once you live in Canada, it is treated as putting new money in.

What actually happens when you make one

The account does not blow up. It splits.

From the moment of the first Canadian contribution, the Roth is treated as two things at once. The portion that existed before, and the income attributable to it, keeps its treaty protection. Everything from the Canadian contribution forward, and the income attributable to that portion, becomes subject to Canadian tax on a current annual basis, as it accrues.

You now own a hybrid. One part behaves like a Roth. The other behaves like an ordinary taxable investment account, except with worse administration, because somebody has to track the split for the rest of the account’s life.

That tracking obligation is the quiet cost. It never goes away, it gets harder as the years pass, and it lands on whoever eventually inherits the account.

What if you already made a Canadian contribution, or missed the deadline

Neither is a reason to panic, and neither is a reason to do nothing.

If you missed the election deadline, late filing is often possible. CRA has processes for accepting late elections, and the outcome depends on the circumstances and on how it is presented. The important thing is that this is a conversation to have with a cross border accountant now rather than later, because the longer the account sits unelected, the more years of accrued income are potentially exposed.

If you made a Canadian contribution, the treaty protection on the pre contribution portion is not lost. What matters at that point is establishing the split cleanly, documenting the balance at the relevant date while the records still exist, and deciding whether the account still belongs in your plan in its current form.

In both cases the fix is documentation and timing, and both get more expensive the longer they wait.

Should you convert to a Roth before you move?

This is where the planning value actually sits, and it is a genuinely interesting question.

If a Roth conversion made while resident in Canada counts as a Canadian contribution, and a conversion made while still a U.S. resident does not, then the timing of a conversion is one of the few large, controllable decisions in the whole cross border move.

Converting before you leave means paying U.S. tax on the converted amount in the year you convert, which is a real cost and can be a large one. But it buys you a Roth that can be elected into treaty protection on arrival, and that then grows without Canadian tax for the rest of your life.

Whether that trade is worth it depends on things that are specific to you. Your U.S. bracket in the conversion year against your expected Canadian bracket later. How long the money has to grow. Whether you have cash outside the account to pay the conversion tax, because paying it from the account itself undermines most of the benefit. And what your income looks like in the year you leave, which for people mid move is often unusually low, and unusually low years are exactly when conversions work best.

This is the conversation to have twelve to eighteen months before a move, not three weeks before.

A short worked example

Consider someone who leaves Boston for Toronto in June. She has a Roth IRA she has funded for fifteen years, and a Roth 401(k) at the employer she is leaving.

Done well: before she moves, she looks at whether a partial conversion of her traditional IRA makes sense while she is still a U.S. resident and her income for the year is low. After she arrives, she files the treaty election letter for her Roth IRA, on time, with her first Canadian return. Later that year she rolls the Roth 401(k) into the Roth IRA, which is permitted and does not count as a Canadian contribution. Her Roth continues to grow, untaxed on both sides, and she never contributes to it again.

Done badly: she moves, nobody mentions the election, and it is never filed. Two years later a new advisor suggests converting a traditional IRA to a Roth “because Roths are tax free”. That conversion is a Canadian contribution. She now has an unelected account with a split basis, several years of accrued income to sort out, and a tracking obligation for life.

The difference between those two outcomes is not money or sophistication. It is one letter and one conversation.

Your pre-move Roth checklist

• List every Roth account you hold, including Roth 401(k)s at former employers. Small forgotten ones are the ones that cause trouble.
• Model whether a conversion before departure makes sense, while you are still a U.S. resident.
• Record the balance of each Roth as at your date of Canadian residency. You will need it for the election letter and possibly forever.
• File the election letter for each account, by your filing due date for the year you arrive.
• Then do not contribute to the account again while you are a Canadian resident, and treat any proposed conversion as a decision that needs cross border advice first.
• Confirm your Roth can actually be managed from Canada. Many U.S. custodians restrict accounts once your address changes, which is a separate problem from the tax one and is worth solving at the same time.

Where we fit

Sartorial Wealth does not prepare tax returns. The election letter and the filings belong with a cross border accountant, and we will work alongside yours.

What we do is the part that decides what those filings say. Whether a conversion happens and when. What the Roth holds once you are in Canada, and whether the same exposure needs a different wrapper. How the Roth sits alongside your RRSP, your TFSA and the rest of the plan. And making sure the investment decisions and the compliance decisions are being made by people who are talking to each other, which is the single thing most often missing when the advisor is in one country and the accountant is in the other.

We are registered in both Canada and the United States, which is what allows us to manage the account rather than watch it from across the border.

Common questions

Is a Roth IRA tax free in Canada?

Generally yes, if you file the treaty election on time and make no Canadian contributions. The treaty lets Canada defer taxing income that accrues inside the account, and because qualified Roth distributions are not taxed in the U.S., they generally are not taxed in Canada either. Without the election, Canada can tax the growth annually.

What is the deadline for the Roth treaty election?

Your filing due date for the tax year in which you became a resident of Canada. It is a one time, irrevocable letter to CRA, and you need a separate one for each Roth account.

Can I contribute to my Roth IRA after moving to Canada?

You should not. A contribution made while you are a Canadian resident is a Canadian contribution, and it permanently ends treaty protection for everything from that point forward. The pre contribution portion keeps its protection, but the account splits into a protected part and a taxable part.

Is a Roth conversion a Canadian contribution?

Yes, if you do it while resident in Canada. Converting a traditional IRA or a qualified plan into a Roth counts as a Canadian contribution even though it feels like moving your own money around. Rollovers from one Roth to another, and from a Roth 401(k) to a Roth IRA, do not count.

What happens if I never filed the election?

Late filing is often possible and worth pursuing. The outcome depends on the circumstances. The practical risk is that unelected years of accrued income accumulate, so this is worth raising with a cross border accountant sooner rather than later.

Should I just collapse the Roth before I move to Canada?

Rarely. A Roth that keeps its treaty protection is one of the most efficient accounts a Canadian resident can hold, precisely because Canada has nothing like it. Collapsing it gives up decades of tax free growth to avoid an administrative step that takes an afternoon.

Does the same treatment apply to a Roth 401(k)?

The treaty pension treatment can apply, and rolling a Roth 401(k) into a Roth IRA is specifically not a Canadian contribution. Most people consolidate for simplicity, but the election requirements still need to be handled properly.

Sources

• Canada Revenue Agency, Income Tax Folio S5-F3-C1, Taxation of Roth IRAs.
• Convention Between Canada and the United States of America With Respect to Taxes on Income and on Capital, Article XVIII. Department of Finance Canada.
• Internal Revenue Service, Roth IRAs.

Is a move to Canada on the horizon?

The election is due with your first Canadian return, and a conversion made after you arrive cannot be undone. We can help you sequence both before they are decided for you. Book a call with Sartorial Wealth, a dual-registered cross-border wealth manager: Book a call

Sartorial Wealth Inc. is a registered Portfolio Manager in Canada (ON, QC, AB, BC, NT, NS, SK, NB, NL) and an SEC-registered investment adviser. Content is for informational purposes only and does not constitute investment, legal, tax, or insurance advice. Investing involves risk; past performance is not indicative of future results. Services are only offered where properly registered. See full disclosures at sartorialwealth.com.