Overview of a Foreign Plan

Foreign plan is one of the most complicated retirement programs offered in Canada. It is ideal for people who want to spend their retirement years abroad. This program can also be used by an individual or company to save money intended for beneficiaries who live outside Canada. Here are some of the most common questions asked about this type of retirement savings plan.

Who Can Open a Foreign Plan Savings Account?

Individuals and companies who are residents of Canada are all eligible to set up this retirement plan. Canadian citizens who live outside the country and even citizens of other countries can also open this type of retirement plan, provided that a company or an individual based in Canada must be appointed to manage the account.

How Does It Work?

If you want to take advantage of this retirement benefits program, you need to open up a registered retirement savings plan (RRSP). Once the account has been setup, you need to make regular contributions to the savings plan. In time, the RRSP proceeds will be rolled into a registered retirement income fund (RRIF) which will then be allocated to the beneficiaries according to the set terms and provisions of the fund. If the recipient does not live in or is not a resident of Canada, a company or person who physically resides in the country must oversee the savings plan on behalf of the beneficiary.

Who Can Be Appointed as Beneficiaries of Foreign Plan?

Primarily, this type of retirement savings program can be enjoyed by individuals who work in Canada, but plan to retire in another country. Canadian residents who want to spend their twilight years abroad should definitely opt for this retirement plan. However, it must be noted that any person, even those who do not have Canadian citizenship, can actually open this type of retirement savings program to augment any existing retirement package. The only condition is that the beneficiary or the person or company that opened the account must fund the foreign plan with income that has been earned through the performance of services outside Canada.

The plan can also be set up for the benefit of other individuals outside the country. If you work or live in Canada but you have a loved one or a family member living in another country, you can name that person as the beneficiary of your RRSP. Aside from individuals, charities and other forms of organizations can also become beneficiaries of this type of savings plan.

What Are the Drawbacks of Foreign Plan?

As mentioned earlier, this kind of savings program is very complicated to maintain. In fact, if you want to open such a fund, it would be a good idea to seek help from professionals who have the expertise in dealing with this particular savings plan. One of the major problems with this retirement program is its tax implications. There are numerous rules as to how this type of financial arrangement is to be reflected on the tax returns of the individuals or companies who opt to open this kind of retirement savings plan.