Hello,
My apologies, if this has already been asked on CD. I am still trying to figure out how to use the search option without getting a million hits. I was on H1 in US for 6 years before moving to Canada as a permanent resident in April 2007. I have some amount in 401k from my old company whom I left a couple of months ago. I also have a Roth IRA and a wachovia brokerage account. I would like to close all these accounts and use these as a downpayment for my house. Trying to get to 20% downpayment to avoid CMHC fee. When should I withdraw(this year or next year) and what would be the best way to avoid/minimise any witholdings? I have a canadian mailing address. Initially I was thinking of doing all this next year to avoid paying any taxes this year, but if the financial institutions are going to withhold taxes(seems like they can be as high as 30% of gross) because I am a non-resident, it will make matters worse.

Regards,
Souvik

One correction first: To avoid CMHC fee, you need 25% downpayment (and not 20%).

I would suggest you leave your 401k and the IRA accounts in the US only. If you take the money out, you will pay the penalty in addition to the witholdings. There is no way to mininize it (unless you are facing extreme hardship, which is usually tough to prove). You can transfer the brokerage account to Canada. Normally, the receiving brokerage firm pays the transfer fee, so you will most probably not get hit with that. Try to negotiate with the cdn brokerage firm (Try TD Canada trust) before moving the account.

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Originally posted by souvik_k
I have some amount in 401k from my old company whom I left a couple of months ago. I also have a Roth IRA and a wachovia brokerage account. I would like to close all these accounts and use these as a downpayment for my house. Trying to get to 20% downpayment to avoid CMHC fee. When should I withdraw(this year or next year) and what would be the best way to avoid/minimise any witholdings? I have a canadian mailing address. Initially I was thinking of doing all this next year to avoid paying any taxes this year, but if the financial institutions are going to withhold taxes(seems like they can be as high as 30% of gross) because I am a non-resident, it will make matters worse.

Regards,
Souvik

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thanks cdn_dude for the reply..


actually the cmhc fee requirement has been reduced to 20% recently

http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_010.cfm

w.r.t to the 10% penalty.. I know about it, but either I take that hit or I have to take additional CMHC insurance which may be a bigger hit. This is why I am trying to understand the withholding requirements. Can I submit a W8-BEN and have them withold just 10%(rather than 20%) + penalty.

Thanks for the CMHC link!

You can submit the W8 form, but I am not sure how they would respond to it. Good luck!

Quote:

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Originally posted by souvik_k

thanks cdn_dude for the reply..


actually the cmhc fee requirement has been reduced to 20% recently

http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_010.cfm

w.r.t to the 10% penalty.. I know about it, but either I take that hit or I have to take additional CMHC insurance which may be a bigger hit. This is why I am trying to understand the withholding requirements. Can I submit a W8-BEN and have them withold just 10%(rather than 20%) + penalty.

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