off shore IRA? Moving money out of US?

[Alan]

Ok, I'll bite.

There's nothing preventing you from liquidating your IRA, pay the appropriate taxes, and move your money offshore to another country. Lots of foreign banks would rather not deal with the hassle of opening bank accounts for US citizens due to FATCA and all the reporting requirements for "US person", but if you can find a foreign bank willing to do it, just remember to declare your foreign bank account to the IRS and pay taxes on any income earned on the said account.

Or you can move your money offshore and buy foreign real estate. There are no IRS reporting requirements for foreign real estate holdings.

There's nothing wrong with looking to diversify your assets internationally, as long as you understand all the risks, tax implications and reporting requirements. Personally, I think the US is as good as it gets, but YMMV.

I think this sums it up very well.

It works both ways for retirement accounts. People who move to the USA and want to move their equivalent of an IRA to the USA find the same issues in that it can't be done without liquidating the account, so in most cases it is simply better to leave it where it is and allow it it to grow, especially since these days it is easy to manage these things online from anywhere in the world. The US has a tax treaty with many countries and one thing that seems to be common is that they respect each other's "pension wrapper" accounts and don't tax them at all until distributions are made.

As mentioned above, US persons have to report the value of all foreign accounts including retirement accounts each year, but they are not taxed on them. (If the sum of all accounts is greater than $10k).

Vanguard UK, just like Vanguard US, has some of the lowest fees around and are very popular, but if you are a US citizen you cannot be a customer even if you live in the UK.

 

[Patricia Lyn]

Lucky dude and Alan, thank you for this information. Diversifying into foreign currencies, etc is an option. Or to buy real estate in some other country, seek dual citizenship, etc. to have a place to go (if you can travel) if in a bad situation domestically.
I realize all of this sounds like doom mongering and I get it. I’m not thinking that very many places in the world are safer, less likely to go full totalitarian and take all the deposits if they get into a crunch or what have you. Just looking into the options. Maybe there won’t be any options if things get really bad. But if you don’t ever think about the worst case scenario, you could be unprepared, at least mentally, if things get dicey.

 

[Chuckanut]

Before moving ones body or assets to another country check out their equivalent (if they have it) of the USA Bill of Rights. You might be surprised as to what you find. I'm not pooh poohing other countries or saying we are #1, The Best, blah, blah blah. I'm just saying that they are different.

Example: Italian laws regarding double jeopardy are not the same as the USA. You can be tried twice under certain conditions.

https://www.cbsnews.com/news/amanda-knox-and-double-jeopardy-does-it-matter-in-italy/

Yesterday’s guilty verdict became the second time the American student and her former boyfriend were convicted of murdering Meredith Kercher. Successive, multiple prosecutions of the same person for the same crime is prohibited in the United States because of the Fifth Amendment to the Constitution that prohibits the government from prosecuting a person multiple times for the same offense.

https://www.cbsnews.com/crime?ftag=CNM-16-10abg0d

Crime
Amanda Knox and double jeopardy: Does it matter in Italy?

By Doug Longhini
January 31, 2014 / 12:34 PM / CBS

But for those of more pedestrian diversions, Alessandro Perissinotto noted that a popular television host once warned that Italians would have to be prohibited from watching the American Perry Mason legal drama because they would get the wrong idea about justice. In his op-ed, Perissinotto went on to say the host's warning “did not imagine” that the Italian idea of justice “could still get worse.”

 

[teejayevans]

It’s my understanding if you want to renounce your citizenship, you have to file one last tax return where they will tax all your unrealized capital gains, retirement accounts, etc.
For most that’s going to be in the an expensive tax bill.

 

[luckydude]

Lucky dude and Alan, thank you for this information. Diversifying into foreign currencies, etc is an option. Or to buy real estate in some other country, seek dual citizenship, etc. to have a place to go (if you can travel) if in a bad situation domestically.
I realize all of this sounds like doom mongering and I get it. I’m not thinking that very many places in the world are safer, less likely to go full totalitarian and take all the deposits if they get into a crunch or what have you. Just looking into the options. Maybe there won’t be any options if things get really bad. But if you don’t ever think about the worst case scenario, you could be unprepared, at least mentally, if things get dicey.

If you're really interested, a number of countries offer "investor" (i.e. golden) visa that essentially allow a well-heeled foreigner to buy his/her way into the country.

For example, New Zealand, which is perpetually on top of every list of best countries in the world to live, offers a couple of investor visa programs. Essentially you move a certain amount into the country to invest in government bonds, equity, property market, etc., keep the money in the country for x years, spend x days a year in the country, and after x years you can obtain residency. Note that the required investment amount isn't cheap - between NZD $3 million to $10 million, depending different factors.

Spain, Portugal, Ireland and a few other countries also offer golden visa options with lower required investment amount.

Australia is another one that offers such an investor program. Like NZ, it is high on the "livability index" and an appealing destination.

Note that many of these countries allow dual citizenship, as does the US. So you won't have to renounce your US citizenship.

IMO, going offshore for asset diversification or additional residency only makes sense if you have significant assets or if you really want to move to another country. If you need all your assets working for you to generate retirement income, then stashing a few bucks overseas just doesn't make a whole lot of financial sense.

 

[Aerides]

One of the things about the US is that changes are very slow and very incremental, and those that would be political suicide, like this idea, even more so.

It would not happen overnight. It would begin as campaign rhetoric, and then even if it survived, would take a lot more than an executive order to happen. You'd get a huge runway to watch it unfold. And then even if it did, there would be immediate injunctions and appeals filed, and then tied up in courts for years.

So, yeah, not something I'd bother with a plan for.

 

[marko]

One of the things about the US is that changes are very slow and very incremental, and those that would be political suicide, like this idea, even more so.

It would not happen overnight. It would begin as campaign rhetoric, and then even if it survived, would take a lot more than an executive order to happen. You'd get a huge runway to watch it unfold. And then even if it did, there would be immediate injunctions and appeals filed, and then tied up in courts for years.

So, yeah, not something I'd bother with a plan for.

+1 We can't even get them to make minor changes to SS let alone decide to start confiscating IRAs.

But if the going ever got dicey, I have the email address of a Nigerian prince who's offered to help me out. So I've got that going for me.

 

[Alan]

Be careful. Had a client, US citizen in UK, hit with $88,444.23 in Lifetime Allowance tax for accumulating too much in a pension account. I don't know how that works exactly, but it seems harsh.

In the UK you are not allowed to accumulate more than £1,079,000 in UK tax deferred pension accounts (doesn’t apply to foreign pension accounts such as IRAs). It is the UK equivalent of RMDs. It means that you should make withdrawals from your UK retirement accounts if needed to stay below that limit. In other words, RMDs are based on the value of the retirement account, not on age. In the USA if you don’t withdraw enough funds to match the RMD for your age you are also subject to tax penalties.

 

[Markola]

Everyone on earth wants to have more dollar-denominated US assets but, of course, the hysterical interwebs is trying to scare lucky Americans into fleeing. Setting up accounts in Grand Cayman, Bermuda, Panama or what have you should come with a T-shirt: “Hello, IRS! Please Audit Me!”

 

[bada bing]

Spain, Portugal, Ireland and a few other countries also offer golden visa options with lower required investment amount.

If you like the vibe in developing countries, a couple I visited last year were appealing to me and a lot lower bar to gain permanent access. Panama offers a pensionado visa if you can show $1000/month in current SS or pension income. Thailand offers a retirement visa if you move $800k baht (about $25K USA) into a Thai bank. If things got dicey, I'd be happy to live in either and I especially like Panama. I'm going back to Panama after the first of the year and I may take the time to fill out an application for a pensionado visa. I personally don't have plans to permanently move anywhere outside the USA, but like a lot of people I'm noticing that having a "plan B" isn't as crazy as it once was.

 

[luckydude]

If you like the vibe in developing countries, a couple I visited last year were appealing to me and a lot lower bar to gain permanent access. Panama offers a pensionado visa if you can show $1000/month in current SS or pension income. Thailand offers a retirement visa if you move $800k baht (about $25K USA) into a Thai bank. If things got dicey, I'd be happy to live in either and I especially like Panama. I'm going back to Panama after the first of the year and I may take the time to fill out an application for a pensionado visa. I personally don't have plans to permanently move anywhere outside the USA, but like a lot of people I'm noticing that having a "plan B" isn't as crazy as it once was.

I agree that developing countries such as Panama and Thailand can be attractive destinations for Western expats seeking a more affordable lifestyle. The problem with many of these developing countries is that the safety of their banking system is often not very robust.

For example, Panama has NO deposit insurance, so if you have money in a Panama bank and it goes belly up, you're "sh*t up a creek".

Thailand has a deposit insurance scheme, but it is a pitiful $1 million baht (about USD $28k at prevailing exchange rate) per depositor per bank. Given Thailand's 1997 financial crisis, that's not very reassuring.

Heck, believe it or not, even a developed 1st world country like New Zealand has NO deposit insurance. Australia, NZ's neighbor across the Tasman Sea, only set up its deposit insurance scheme in 2008 in response to the financial crisis.

A lot of Americans thinking about going offshore with their asset often have little idea about the relatively safety and soundness (or lack thereof) of bank systems in foreign jurisdictions. They often think that grass is greener on the other side. The reality is that the US, warts and all, is pretty much as good as it gets when it comes to the protection of financial and real assets, with multiple layers of government backstops and guarantees built in, an independent, robust judicial system to address disputes and grievances, and a huge amount of government resources at its disposal to tackle crises.

 

[GravitySucks]

I can't think of a government LESS likely to confiscate bank accounts than the US.
(Maybe Switzerland?)

 

[luckydude]

I can't think of a government LESS likely to confiscate bank accounts than the US.
(Maybe Switzerland?)

Switzerland is a great place if your money is dirty and needs a good cleaning. Swiss banks provide the best laundry service in the world.

 

[Alan]

Switzerland is a great place if your money is dirty and needs a good cleaning. Swiss banks provide the best laundry service in the world.

These days Swiss banks comply with FATCA, USC account holders must provide a W-9, authorizing them to report into the IRS.

https://swiss-banking-lawyers.com/h... have to make the,the benefits of Swiss banks.

https://www.premiumswitzerland.com/financial-news/banking/accounts-for-us-citizens.htm

 

[luckydude]

These days Swiss banks comply with FATCA, USC account holders must provide a W-9, authorizing them to report into the IRS.

https://swiss-banking-lawyers.com/h... have to make the,the benefits of Swiss banks.

https://www.premiumswitzerland.com/financial-news/banking/accounts-for-us-citizens.htm

Yes, for US citizens, Switzerland is no longer a good place to hide money thanks to FATCA. But there are still plenty of dirty money from other parts of the world for Swiss bankers to clean.

 

[Alan]

Yes, for US citizens, Switzerland is no longer a good place to hide money thanks to FATCA. But there are still plenty of dirty money from other parts of the world for Swiss bankers to clean.

Maybe I missed that the OP is not a USC.

 

[sengsational]

Considering a non-US residency given horrific turmoil in the US, one should probably imagine that the country that looks ok now would probably drop even faster than the US. IOW, any financial contagion that put the US in a tailspin would decimate these other countries. This, based on the worldwide financial interdependence that I think is reality.

 

[jollystomper]

One of the things about the US is that changes are very slow and very incremental, and those that would be political suicide, like this idea, even more so.

It would not happen overnight. It would begin as campaign rhetoric, and then even if it survived, would take a lot more than an executive order to happen. You'd get a huge runway to watch it unfold. And then even if it did, there would be immediate injunctions and appeals filed, and then tied up in courts for years.

So, yeah, not something I'd bother with a plan for.

After the events of the last few years, I tend to agree with this less. The phrase "never let a good crisis go to waste" has, in my view, been executed at times to make things change very quickly because there is a "crisis" .

 

[Patricia Lyn]

OP here
Thank you to all the contributors to this thread. I’m learning a lot! I am a US citizen and I have never questioned the safety of our banking system. But recent events have made me wonder. I also agree that most other countries would tail spin faster than we would due to our reserve currency status.
The depositor insurance in foreign banks has never even occurred to me. Good point. Another thought while reading these comments is the overwhelming confidence most have about the reluctance of our government to touch any savings deposits of the US citizens even in dire times. I guess if times were that bad (ie major depression, millions thrown out of work, food scarcity, run away inflation, another pandemic only this time much higher death rate, civil unrest, etc) most other countries will get there ahead of us and we will have time to react.
Anyway, thanks for the mental exercise. You’ve given me a lot to think about and look into.

 

[luckydude]

Maybe I missed that the OP is not a USC.

I think OP is USC. My comment about Swiss bankers was merely a general observation and not specifically directed at OP

 

[NW-Bound]

Buy gold, bury in backyard.

Hey, I suddenly remember an exchange here on this forum when we talked about keeping gold hidden in plain sight.

I no longer remember what prompted it, other than I suggested making doorknobs out of pure gold.

Nobody would expect your doorknobs would be 24-carat gold, except that they feel heavy and cause the door to slam when you open or close it.

 

[HI Bill]

AJ888 and Spock,
Thanks for the thoughtful replies. I guess you are probably right that the US is the cleanest dirty shirt. It’s just so scary to keep money in an institution that could either go under, suffer a devastating cyber attack, or an EMP even! All those years of living frugally in order to save for retirement…poof! I guess a government confiscation would be better than an EMP. maybe I should just stop looking at Zero hedge!

Maybe you should watch Mr. Robot. I'm assuming that VG, and all of the major houses have separate servers in different cities, and even if a mega-powerful EMP took out one, there would be back-ups. More likely to wipe them out would be a world-wide nuclear war, which I'm personally more concerned about than EMPs or even a cyber attack.

 

[HI Bill]

It’s my understanding if you want to renounce your citizenship, you have to file one last tax return where they will tax all your unrealized capital gains, retirement accounts, etc.
For most that’s going to be in the an expensive tax bill.

Yes, there's an "exit tax". "Do I have to pay taxes if I renounce my citizenship? If you are a US citizen and you decide to renounce your US citizenship this can still have substantial tax implications to you. The US imposes an ‘Exit Tax’ when you renounce your citizenship if you meet certain criteria.

Generally, if you have a net worth in excess of $2 million the exit tax will apply to you. This tax is based on the inherent gain (in dollar terms) on ALL YOUR ASSETS (including your home). You will also be taxed on all your deferred compensation—such as pensions at the time of expatriation.

The exit tax will also apply to you, even if your net worth is below $2 million, if you have not complied with your US tax obligations for the last five years. The $2 million trigger will not apply to certain individuals who are dual citizens at birth. But the tax will still be imposed if they have not met the five year tax compliance test."

 

[luckydude]

OP here
Thank you to all the contributors to this thread. I’m learning a lot! I am a US citizen and I have never questioned the safety of our banking system. But recent events have made me wonder. I also agree that most other countries would tail spin faster than we would due to our reserve currency status.
The depositor insurance in foreign banks has never even occurred to me. Good point. Another thought while reading these comments is the overwhelming confidence most have about the reluctance of our government to touch any savings deposits of the US citizens even in dire times. I guess if times were that bad (ie major depression, millions thrown out of work, food scarcity, run away inflation, another pandemic only this time much higher death rate, civil unrest, etc) most other countries will get there ahead of us and we will have time to react.
Anyway, thanks for the mental exercise. You’ve given me a lot to think about and look into.

Some closing thoughts. If I had to pick a foreign jurisdiction for offshore diversification, New Zealand would be my pick:

Western democracy
English speaking
Geographically isolated
Stable government
Strong banking system (although no depositor insurance scheme in place)
stable currency
No capital gains tax
No estate tax
Multi-cultural but no major ethnic tensions
Temperate climate
Outside Auckland, low population density
Similar lifestyle to US
13-hour non-stop flight from West Coast
US residents can open bank accounts with local banks (subject to FATCA)

The only downside---New Zealand used to have no restrictions on foreign real estate ownership until 2018, when laws were amended to prevent foreigners from buying up residential property (and pricing out locals in the process). Now, foreigners can only buy units in new apartment developments but nothing else.

 

[SecondAttempt]

Please don't believe conspiracy theorists and con men. You live in one of the most secure and "rule of law" countries in the world. Anyone who suggests otherwise is an idiot or a scammer.

Do we have our problems? Yes of course. But the government cannot confiscate your money nor can the banks.

So someone came to your church or you saw a youtube video that scared you. Use your head. If he came to your church, time to quit that church because they are scamming you. If it was youtube, time to block whoever sent you that link!

I'm not trying to beliitle you or cause you to question your church or other social structures. But anyone who told you this crap is just after your money and you need to get far away from them!