so that has her convinced that IB will close her IRA when they transfer it and then turn it into the European country equivalent, meaning that she will pay full tax on the the IRA distribution.

The only issue there is that there aren't (m)any IRA equivalents here in Europe.

France recognizes a US IRA as a "government pension" - so under the US-France tax treaty she will be taxed only in the US on withdrawals (i.e. not at all on the Roth withdrawals) and granted the tax credit at French rates when declaring her withdrawals on French declarations. Depending on where she currently has her accounts and what she is planning on doing with them after she moves, I would suggest that she hang tight until she moves, and then just file a standard old change of address form with the institution holding her accounts.

Unless she is planning on doing some serious buying and selling of investments, they may allow her to keep her plans in place as long as she is mainly just taking distributions. (I only suggest that because that is precisely what I am doing right now and haven't heard a peep on the matter from Vanguard. There may well be some company policies she'll have to comply with. In the case of Vanguard, I believe they require a minimum 15% be withheld for Federal income tax if the overseas customer is a US citizen. The standard 30% withholding applies for a non-US citizen not resident in the US taking distributions from their funds. You do have to take the distributions to a US bank (like the US $ account in Wise). They will make direct deposits/wire transfers to foreign banks, but all those apparently require a 30% withholding.

 

Thanks for the prompt reply Bev. Oddly enough my friend presently has an account with Vanguard, and when she asked them about keeping it when she moves to France and no longer has a US address they point blank told her that she could not. That's what set her off on the chase for a company that will let her keep her accounts.

The next thing to make sure of is that the account stays open as a tax deferred account for the purposed of US taxes (both IRA and Roth) when it is no longer domiciled in the US. She doesn't want to be hit with a tax bill for the full distribution of an IRA, nor loss the protection that a Roth provides against capital gains tax if it ends up in a regular brokerage account.

The question really is if existing IRA and Roth accounts can be kept as such even if their domicile is changed from the US to a European country.

 

The question really is if existing IRA and Roth accounts can be kept as such even if their domicile is changed from the US to a European country.

All I know is that the "domicile" of my IRA account hasn't changed. It's still with Vanguard in the US. I changed my address with them probably nearly 30 years ago now and just let whatever was in there sit tight until I hit the "magic age" to start taking distributions. Which I have been doing for about 5 years now. I guess ignorance really is bliss - I just keep on keeping on as I have been doing for ages now and no one has said anything about closing out my account.

 

Hello Sneetch: I was curious how your friend ended up doing with her retirement accounts... did she find a solution? take care, Nick

 

Here is what I found on Interactive brokers website... it is confusing... wondering if your friend got a chance to clarify...


OPEN IRA ACCOUNT OPEN LINKED IRA ACCOUNT

U.S. citizens living anywhere in the world and U.S. resident aliens may open cash or margin Individual Retirement Accounts (IRAs). Please note, residents of Australia, Canada, the European Economic Area ("EEA"), Hong Kong, India, Japan and Singapore may not open Individual Retirement Accounts.

 

@Nick12348 -- All IRAs require a U.S. based Custodian. Bottom line, it doesn't matter where you live; the IRA Custodian is the "Trustee" of your IRA (an IRA is a form of trust.)

Most large brokers have in-house capabilities to serve as custodians for IRA accounts at their firms. Many smaller firms do not and either have a recommended 3d party trustee or will only open IRA accounts for a trustee you've hired. These are often called "self-directed" IRA Custodians. These custodians will execute investments based on your desires (open a brokerage account, buy real estate, invest in a private company, etc.) They will do their best to keep you from performing a "prohibited transaction," but they are "self-directed," so the responsibility is still ultimately yours so you should know the rules (like not selling stock short in an IRA account.)

Each brokerage firm can have their own rules. It is not out of the question for a U.S. based IRA Custodian to open an account at a "foreign" brokerage firm on behalf of a customer.

Investors that want even more flexibility/control can open an account with a 3d party IRA Custodian -- then instruct the Custodian to "buy" an LLC, on behalf of the IRA, and managed by the investor (the LLC can also be off-shore, but most custodians restrict their costumers to on-shore entities.) The investor, as the LLC Manager, can make investments as they see fit (they still have to abide by the prohibited transaction rules.) If the LLC is "wholly owned" by the IRA, it will be considered a "disregarded entity" and no income tax return is filed (all income/expenses flow up to the IRA) unless debt financing is involved. The Custodian does reporting on behalf of the IRA when certain thresholds are met. Cheers, 255

 

Hello and thank you very much. Would you be able to suggest names of US brokerage firms that do offer IRA accounts for US citizens living in France? Much appreciated, Have a great day! Nick

 

@Nick12348 -- As has been posted above, Interactive Brokers is the firm most often recommended, but Charles Schwab International has shown up lately. There are also U.S. based financial advisors that will take you on as a client, if you're not inclined to "roll-your-own." Creative Planning International is used by many forum members, but there are others.

Personally, I am now researching self-directed IRA custodians, but I don't have a recommendation yet. If you go this route, I'd recommend a custodian that has fixed fees vice taking a percentage of assets invested. Cheers, 255

P.S. If you want to invest off-shore, you'll need to find an IRA custodian that supports that or have an IRA LLC where you control the investments.

 

thanks again for the very interesting exchange. have you researched Etrade as well? I know the Creative Planning guys and I like them but am a self-trading person so maybe for my older days. A this stage my preference is a purely US domestic broker. thanks again cheers, Nick

 

I am pretty sure Sogo Trade will offer IRAs for US citizens in France. Give them a call. I have a small position with them (not an IRA) and they told me that a French address doesn't scare them, though I haven't changed it yet.

 

Thank you. I will check them out. Have a good one, Nick

 

We use Atlantic Private Wealth in North Carolina. They handle many US clients who reside in Europe, and were specifically recommended to us by our previous financial planner when his firm was bought by Goldman-Sachs, who declined to service us living overseas. APW manages our funds, which are actually still housed at Fidelity (who are apparently cool with this type of arrangement). Not only does APW do this, but they are excellent. I love those guys, and their customer service is simply outstanding. If anyone contacts them, use my name just in case any referral bonuses are available! Our mission is to help you accomplish your vision.

 

Many thanks for the recommendation. have a great day, Nick

 

@Nick12348 -- I've not used nor researched E-Trade for literally decades; they are now owned by Morgan Stanley.

If you are an active trader -- you might consider one of the many "funding" companies. This is a new offering, but seems interesting: Tradefundrr - Home . This is one of the few equity "prop." firms that doesn't require licensing/testing and operates internationally. Cheers, 255

 

Thanks again for the great ideas.

 

Hello all and hello Sneetch:
I spoke to Interactive Brokers (IB) and they do allow US citizens living abroad (anywhere) to open an IRA with IB USA. If you want to open an individual taxable account, they will put it under one of their non-US subsidiaries, like in Ireland. But the IRA stays in the US which is what you would want.
Curious to know what your friend ended up doing.
Have a great day, Nick