The foreign plan is a Canadian retirement savings plan that is created for individuals who are not Canadian residents. It is intended specifically for individuals who plan to retire beyond the borders of Canada. The plan can be funded by establishing a registered retirement savings plan and making contributions on a regular or periodic basis. Those funds are then rolled into a registered retirement income fund and disbursed according to the stipulations of the plan.
The citizens of any country can participate in the foreign plan. It can be funded with income earned both inside and outside of Canada. If, however, the beneficiary does not reside in Canada another entity must be selected to manage the fund.
It isn’t uncommon for someone to establish a foreign plan to provide support for a beneficiary who doesn’t live in Canada. A child or other relative may receive the assets from the fund. It can even be established in the name of a charity. Even Canadian citizens who work in Canada but intend to retire elsewhere can establish such a fund in order to save money from income earned in country.
Setting up a foreign plan is acknowledged as a viable way to save for retirement that won’t take place in Canada. However, it is quite complicated. It affects the filing of Canadian tax returns and should involve the help of a tax professional who is intimately familiar with the complexities that result. A foreign plan is not suitable for all individuals who plan on retiring outside of Canada, so make sure to consult with an expert before setting one up.
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