Cardinal Point Wealth Management Alerts CrossBorder Canadian Residents Regarding US Brokerage Account Closures and What They Need To Do ASAP

Growing numbers of US institutions are notifying clients living in Canada that their retirement and brokerage accounts will soon be terminated.
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Toronto, ON-May20,2025 - Cardinal Point Wealth Management [https://cardinalpointwealth.com/our-story/] ("Cardinal Point"), a Canada and US crossborder investment and wealth advisory firm, today released an advisory outlining why a growing number of US financial institutions are terminating brokerage and retirement accounts for clients living in Canada. Cardinal Point also shares practical steps affected investors can take within the 60day notice period typically offered, to avoid adverse consequences.

A Convergence of Regulatory Pressures

According to Cardinal Point, three intersecting compliance hurdles are driving the trend:

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Foreign Account Tax Compliance Act (FATCA). Enhanced US reporting rules have increased operational risk and cost for brokerdealers serving clients with foreign addresses. Many firms now avoid the complexity altogether.

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Dualregistration requirements. Under securities laws, both the institution and any advisor providing guidance must be properly registered where the client lives. Few US advisers maintain Canadian provincial licenses, making continued service problematic once a client relocates north of the border.

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Divergent taxreporting formats. US custodians issue forms aligned with the Internal Revenue Code, but do not provide the Canadian Tslips residents need to complete returns under the Income Tax Act.

"These three pressures have combined to make nonresident account maintenance uneconomical for many institutions," the firm noted in its bulletin. "Clients often learn of the policy only when they receive a 60day termination notice."

Implications for Taxable (NonRetirement) Accounts

Cardinal Point outlines two principal responses to termination notices:

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Transfer assets to another US custodian that accepts Canadian addresses. Although the list of willing firms is shrinking, eligible investors can preserve tax lots and avoid immediate capital gains recognition. The firm cautions that investors must provide their actual Canadian address. Using a relative's US residence, for example, can trigger unintended scrutiny and statetax filing obligations.

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Liquidate and repatriate cash to Canada. This route can expose investors to US capitalgains tax, foreignexchange costs, and-in Canada-potential Passive Foreign Investment Company (PFIC) complications if they reinvest in Canadian mutual funds. For those forced into this path, Cardinal Point recommends careful modeling of both tax regimes before trades settle.

Considerations for IRAs

Many US custodians prohibit Individual Retirement Accounts (Traditional or Roth) for nonUS residents. The advisory lists three alternative options:

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Locate a US custodian willing to hold IRAs for Canadians: This is the least disruptive solution but requires proactive outreach.

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Avoid direct rollovers to Canadian RRSPs: Such transfers constitute taxable distributions under US law and may trigger an additional Canadian tax unless a tax treaty election is made.

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Lastresort distribution: Should liquidation become unavoidable, investors face ordinary income tax in the United States, possible earlywithdrawal penalties, and Canadian taxation at the higher marginal rate-with foreigntax credits applied only after filing in both countries.

Action Steps Within the 60Day Window

Cardinal Point recommends that affected investors:

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Act immediately. Custodial paperwork, AntiMoneyLaundering verification, and transfer processing can consume much of the notice period.

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Engage qualified crossborder professionals. Coordinated investment and tax advice helps avoid double taxation and PFIC pitfalls.

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Keep assets invested. Accepting a mailed check can crystallize gains, disrupt market exposure, and complicate currency conversion.

"While account closures are unsettling, the situation is manageable with timely, informed decisions," Cardinal Point stated. "Investors should neither ignore the notice nor rush into solutions that compromise longterm objectives."

Broader Market Context

Industry observers note that other developed markets have faced similar tightening. European expatriates in the United States have seen local platforms restrict service for comparable reasons. Cardinal Point expects the US-Canada corridor to remain under heightened scrutiny, given the scale of crossborder migration and the complexity of the two countries' tax treaty.

About Cardinal Point Wealth Management

Cardinal Point Wealth Management is an independent, feeonly firm providing holistic crossborder investment management [https://cardinalpointwealth.com/cross-border-investment-management-resource-hub/], financial planning, and tax advisory services to individuals and families who live, work, or invest in both the United States and Canada. With professionals dually licensed on both sides of the border, the firm offers integrated solutions that align with the regulatory, tax, and cross-border estateplanning [https://cardinalpointwealth.com/cross-border-estate-planning/] requirements of its clients' unique circumstances.
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