Moving to the U.S.? Don’t rush to convert your Canadian portfolio
For many Canadians relocating to the United States, one of the first financial questions that surfaces is whether they should convert their Canadian investments into U.S. dollars. The answer is usually no, and acting too quickly can cost you more than you might expect.
The instinct to “go American” makes sense but can be expensive
When London accepted a new job opportunity in Seattle, he assumed one of the first things he would need to do was convert his Canadian investment portfolio into U.S. dollars. Like many Canadians moving south, the logic seemed straightforward: If he was going to live, work, and spend money in the United States, shouldn’t his investments be in U.S. dollars too?
At the time of his move, London had approximately $500,000 invested in a non-registered account at a Canadian financial institution. The problem? Currency conversions are not investment decisions—they are foreign exchange decisions.
As of June 2026, the Canadian dollar remains relatively weak compared to the U.S. dollar. At an exchange rate of approximately 0.7166, London’s $500,000 Canadian portfolio would convert to roughly $358,300 USD.
Now, imagine the Canadian dollar strengthens to 0.85 a few months later. That same $500,000 would be worth approximately $425,000 USD.
Build your retirement savings with 1.50% interest, tax-deferred contributions and zero fees.
Earn a guaranteed 2.75% in your RRSP when you lock in for 1 year.
See our ranking of the best RRSP accounts and rates available in Canada.
MoneySense is an award-winning magazine, helping Canadians navigate money matters since 1999. Our editorial team of trained journalists works closely with leading personal finance experts in Canada. To help you find the best financial products, we compare the offerings from over 12 major institutions, including banks, credit unions and card issuers. Learn more about our advertising and trusted partners.
While nobody can predict currency movements, the point is simple: converting a large portfolio immediately after crossing the border can permanently lock in an unfavourable exchange rate. Currency markets move in cycles. Making a major foreign-exchange decision simply because you’ve moved countries is rarely sound financial planning.
In many cases, Canadians can continue holding Canadian-dollar investments after moving to the United States. If you expect to maintain Canadian ties, own Canadian property, support family members in Canada, or potentially return one day, retaining some exposure to the Canadian dollar may make sense.
Your tax residency changes the rules
What does need to change is how your accounts are structured—not necessarily the investments inside them.
When London moves to Seattle, his non-registered account can’t simply remain untouched at his Canadian institution. His change in residency creates both regulatory and tax implications. Canada taxes based on residency; the United States taxes based on citizenship and residency. Once London becomes a U.S. tax resident, he becomes subject to IRS reporting requirements on his worldwide income and assets, including investments held outside the United States.
For many Canadians, this means transitioning non-registered assets to a U.S.-licensed advisor or institution capable of servicing U.S. residents while maintaining compliance with both Canadian and American regulations.
This is an important distinction. The account may need to move, but the investments themselves do not necessarily need to be converted into U.S. dollars.
Compare the best TFSA rates in Canada
Registered accounts require separate consideration. RRSPs generally continue to receive tax-deferred treatment under the Canada-U.S. Tax Treaty; however, not all U.S. states follow the treaty. While most states respect the tax-deferred status of an RRSP, a few may tax the account’s income and growth annually. That’s why understanding both federal and state tax rules is an important part of any cross-border move.
The PFIC trap: A costly surprise for many new U.S. residents
One of the biggest surprises facing Canadians who move south is the U.S. tax treatment of Canadian mutual funds and ETFs. The IRS generally classifies most Canadian mutual funds and ETFs as Passive Foreign Investment Companies, or PFICs.
PFIC rules are notoriously complex. They often require additional annual reporting and can result in unfavourable tax treatment for U.S. taxpayers. Many Canadians discover this issue years after moving—often when a U.S. accountant reviews their holdings for the first time.
For London, this becomes a critical planning consideration. If he continues holding Canadian-dollar investments after becoming a U.S. resident, he cannot simply maintain the same portfolio he owned while living in Canada. Investments that worked perfectly well as a Canadian resident may become problematic from a U.S. tax perspective.
You can still own Canadian investments
Fortunately, avoiding PFICs does not mean abandoning Canadian investments altogether.
Cross-border portfolios can often be built using individual Canadian stocks, individual bonds, and other investments that do not fall under the PFIC rules. This allows investors like London to maintain Canadian market exposure while avoiding unnecessary reporting complexity and potentially adverse tax consequences.
For larger portfolios, this approach can also provide greater flexibility when managing taxes, currency exposure, and long-term financial goals.
It’s not a compromise. In many cases, it’s simply a better structure.
The bottom line: Plan before you pack
Before moving to Seattle, London assumed his biggest financial decision would be converting Canadian dollars into U.S. dollars. The reality is that there are more important questions involving tax residency, account structure, PFIC exposure, regulatory requirements, and long-term planning.
For Canadians relocating to the United States, the right strategy generally is not to convert everything to U.S. dollars on day one. The focus should instead be on restructuring accounts appropriately, understanding cross-border tax obligations, identifying potential PFIC exposure, and making currency decisions deliberately, not emotionally.
The tax and regulatory differences between Canada and the United States are real, but they’re manageable with proper planning. The goal is to arrive in the country with your portfolio intact, your obligations understood, and a strategy that works on both sides of the border.
Get free MoneySense financial tips, news & advice in your inbox.
Read more about cross-border investing:
- Moving away from Canada? Your mutual funds can’t go with you
- Your American spouse may not want to inherit your TFSA
- What happens to an RESP when a family moves to the U.S.?
- Moving to the U.S.? Your locked-in RRSP may not be as locked in as you think
The post Moving to the U.S.? Don’t rush to convert your Canadian portfolio appeared first on MoneySense.
No comments