Moving to the U.S.? Don’t rush to convert your Canadian portfolio

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.

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.

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.