The Best Retirement Withdrawal Order for Dual Nationals

Retirement planning can be tricky, but for dual nationals who have financial connections in both Canada and the United States, it becomes even more complex. Many people hold retirement accounts such as RRSPs in Canada and IRAs or 401(k)s in the U.S. Knowing the right order to withdraw money from these accounts can help reduce taxes, stretch savings, and make retirement more comfortable. Understanding how to balance both systems is key, and this is where expert advice from 49th Parallel Wealth Management can make a big difference.

When you retire, your income sources usually come from several places: government pensions, personal savings, and retirement accounts. For dual nationals, these could include the Canadian Pension Plan (CPP), Old Age Security (OAS), U.S. Social Security benefits, RRSPs, IRAs, and taxable brokerage accounts. The challenge is figuring out which to tap into first. Taking money in the wrong order can lead to paying more taxes than necessary or losing out on government benefits.

The general rule for most retirees is to withdraw from taxable accounts first, then tax-deferred accounts like RRSPs and IRAs, and finally from tax-free accounts such as a Roth IRA or TFSA. This order allows your tax-advantaged savings to keep growing for as long as possible. However, for dual nationals, tax laws from both countries come into play. Each country has its own way of taxing income, and the U.S.–Canada tax treaty helps prevent double taxation — but you still need to be careful about timing and reporting.

For example, if you’re a Canadian citizen who later moved to the U.S., your RRSP withdrawals may be taxed differently in each country. The same goes for Americans who retire in Canada with IRA savings. A good withdrawal strategy should focus on which country considers you a tax resident at the time of withdrawal, as that determines how much tax you’ll owe. Experts in USA investment management services often recommend coordinating your withdrawal plan with both U.S. and Canadian tax advisors to avoid surprises.

Another smart move is to look at your income brackets in both countries. By carefully controlling how much you withdraw each year, you can stay in a lower tax bracket and minimize your overall tax bill. It’s also helpful to consider exchange rates. Since you may need to convert between U.S. dollars and Canadian dollars, withdrawing strategically when the exchange rate is favorable can make a noticeable difference over time.

If you have both Social Security and CPP or OAS benefits, it’s wise to understand how they interact. Some retirees delay starting one benefit to allow it to grow while using withdrawals from another source. For example, you might delay Social Security until age 70 for higher monthly payments, while taking small RRSP or IRA withdrawals in your 60s. This kind of planning helps smooth out income and reduce tax spikes later in retirement.

Estate planning is another part of the equation. The order in which you withdraw money affects how much you leave behind to family. Certain accounts are more tax-efficient to pass on than others. For example, tax-free accounts like a Roth IRA or TFSA can be great for leaving a legacy, while taxable accounts may have benefits like a step-up in cost basis at death. For dual nationals, it’s important to structure withdrawals so that your estate is simple and tax-efficient under both Canadian and U.S. law.

It’s also a good idea to keep flexibility in your plan. Laws and tax treaties can change, and so can your personal situation — like where you live or whether you gain or lose residency in one country. Reviewing your withdrawal plan every few years with professionals such as 49th Parallel Wealth Management ensures you stay compliant and optimized. Their team specializes in cross-border financial planning and USA investment management services, helping clients manage taxes, investments, and retirement income across both countries.

In conclusion, the best retirement withdrawal order for dual nationals is not one-size-fits-all. It depends on your residency, income needs, and the tax rules of both the U.S. and Canada. The right strategy can help you keep more of your hard-earned savings and enjoy a financially secure retirement. By coordinating withdrawals, using tax treaties wisely, and getting professional guidance, dual nationals can build a retirement plan that truly works across borders.