Moving back to Europe

[FIREd]

Due to a recent life event, I am considering permanently relocating to Europe within a couple of years (I have a EU passport).

I currently am a US permanent resident (green card holder). I am thinking about liquidating all my assets in the US (going all cash), then moving the money to my final destination (I have no idea yet how the money will be ultimately re-invested). It is my understanding that I can surrender my green card upon leaving the country to avoid future US tax and banking (FATCA) complications while living in Europe.

I currently have:
* some taxable mutual funds (with about $130K in LTCGs)
* some bank CDs (most with small withdrawal penalties)
* one Roth IRA (I did yearly IRA conversions into the Roth until last year)
* some i-bonds (all but one are redeemable - the last one will be redeemable next April- but I would have to pay taxes on the few thousand dollars of accumulated interests)
* one HSA account with about $6K in it.

Without liquidating my portfolio, I would probably be in the 12% tax bracket (single) for the remainder of my stay in the US. Any strategy to minimize the tax bite while liquidating my assets? Will I be able to liquidate the Roth and HSA, and if so, at what cost? Any other options?

 

[Red Badger]

While I can offer zero on financial strategy, I am wishing that this is for a good purpose.
Godspeed,
8

 

[NW-Bound]

I cannot offer any help, but hope everything is OK, and wish you the best for the future.

 

[Freedom56]

Due to a recent life event, I am considering permanently relocating to Europe within a couple of years (I have a EU passport).

I currently am a US permanent resident (green card holder). I am thinking about liquidating all my assets in the US (going all cash), then moving the money to my final destination (I have no idea yet how the money will be ultimately re-invested). It is my understanding that I can surrender my green card upon leaving the country to avoid future US tax and banking (FATCA) complications while living in Europe.

I currently have:
* some taxable mutual funds (with about $130K in LTCGs)
* some bank CDs (most with small withdrawal penalties)
* one Roth IRA (I did yearly IRA conversions into the Roth until last year)
* some i-bonds (all but one are redeemable - the last one will be redeemable next April- but I would have to pay taxes on the few thousand dollars of accumulated interests)
* one HSA account with about $6K in it.

Without liquidating my portfolio, I would probably be in the 12% tax bracket (single) for the remainder of my stay in the US. Any strategy to minimize the tax bite while liquidating my assets? Will I be able to liquidate the Roth and HSA, and if so, at what cost? Any other options?

Before liquidating your assets, consider where you plan to invest in Europe. The banks pay next to zero on balances and term deposits. We live in Switzerland for 2-3 months every year. We were impacted by FATCA but worked around it by opening a Citi Global currency account and hold Swiss Francs, Euros, and Canadian Dollars. You would not have to do that. I would check what tax treaties are in place between the US and the country you are moving to determine if it makes sense to continue to hold some investment in the US until it is more advantageous to make the transfer.

 

[Gumby]

Don't forget to file this form with the IRS after you leave. https://www.irs.gov/forms-pubs/about-form-8854

 

[FIREd]

Don't forget to file this form with the IRS after you leave. https://www.irs.gov/forms-pubs/about-form-8854

Thanks, I will add that to my checklist.

 

[cooch96]

As far as the Roth goes, I believe you can only access the growth/returns and dividends if you have had it in the Roth for five years. So I think you still have 4 years until you have full access. There’s a 10% penalty on whatever returns you withdraw that hasn’t been in the account for 5 years. You have full access to the principal you’ve invested. This rule may only be for those under 59.5 years old.

 

[FIREd]

Before liquidating your assets, consider where you plan to invest in Europe. The banks pay next to zero on balances and term deposits. We live in Switzerland for 2-3 months every year. We were impacted by FATCA but worked around it by opening a Citi Global currency account and hold Swiss Francs, Euros, and Canadian Dollars. You would not have to do that. I would check what tax treaties are in place between the US and the country you are moving to determine if it makes sense to continue to hold some investment in the US until it is more advantageous to make the transfer.

It's difficult to say how (and where) the money will be reinvested at this time. It could be reinvested in the market or it could go into real estate (a favorite, tax-efficient investment in some parts of Europe). I need to do a lot more research to come up with a new, tax-efficient investment plan tailored for my new locale.

Now, I would love to keep some of my current investments with US exposure (particularly Vanguard's Total Stock Market ETF), but preferably not in a US-based account for simplicity sake. I hear that a lot of European investors recommend Interactive Brokers for investing in US securities. I wonder if I could open a IB account while I am still here, transfer all my assets to that account, and simply change my address on the account (or do a in-house transfer to a EU-based IB account) after the move? Anyone has experience with this? My capital gains are small enough that I would not have to worry about the US Exit Tax even if I transferred my taxable ETFs in kind (I would still cash in the CDs and i-Bonds since the penalty would be minimal for those).

 

[MichaelB]

Will I be able to liquidate the Roth and HSA, and if so, at what cost? Any other options?

You can withdraw from the HSA, but if not for reimbursement of medical expenses, you pay a 20% penalty (if under age 65) and the investment or interest gain becomes taxable income.

 

[FIREd]

You can withdraw from the HSA, but if not for reimbursement of medical expenses, you pay a 20% penalty (if under age 65) and the investment or interest gain becomes taxable income.

Good to know. I only opened the HSA late last year and the money is still sitting in cash, so no significant gain (or any really) to report. I will try to use the money in the HSA as much as possible over the next couple of years to pay for health-related expenses. It will bring down the balance and reduce the penalty amount.

 

[FIREd]

As far as the Roth goes, I believe you can only access the growth/returns and dividends if you have had it in the Roth for five years. So I think you still have 4 years until you have full access. There’s a 10% penalty on whatever returns you withdraw that hasn’t been in the account for 5 years. You have full access to the principal you’ve invested. This rule may only be for those under 59.5 years old.

I only started making IRA to Roth conversions back in 2014, so none of the money has been in the account more than 5 years. The total amount of the conversions (2014-2017) was about $49K and the account is now worth about $67K. So if I understand correctly, I could take the full amount out now, but I would have to pay a 10% penalty on the gain (18K)? I am 44 by the way.

 

[Freedom56]

It's difficult to say how (and where) the money will be reinvested at this time. It could be reinvested in the market or it could go into real estate (a favorite, tax-efficient investment in some parts of Europe). I need to do a lot more research to come up with a new, tax-efficient investment plan tailored for my new locale.

Now, I would love to keep some of my current investments with US exposure (particularly Vanguard's Total Stock Market ETF), but preferably not in a US-based account for simplicity sake. I hear that a lot of European investors recommend Interactive Brokers for investing in US securities. I wonder if I could open a IB account while I am still here, transfer all my assets to that account, and simply change my address on the account (or do a in-house transfer to a EU-based IB account) after the move? Anyone has experience with this? My capital gains are small enough that I would not have to worry about the US Exit Tax even if I transferred my taxable ETFs in kind (I would still cash in the CDs and i-Bonds since the penalty would be minimal for those).

You can open up a brokerage account where you plan to move and transfer you assets there. Be sure to notify Treasury before transferring any amounts greater than $10K.

 

[tmm99]

Good to know. I only opened the HSA late last year and the money is still sitting in cash, so no significant gain (or any really) to report. I will try to use the money in the HSA as much as possible over the next couple of years to pay for health-related expenses. It will bring down the balance and reduce the penalty amount.

I still pay my medical expenses (for getting a pair of glasses, prescription drug deductibles, etc) using my HSA VISA card in Canada. When I can't use the card, I upload the invoice to my HSA account online and have the money reimbursed (deposited into my US bank account), so if you cannot use up your HSA funds in time, I'm sure you can still use it wherever you are.

 

[ivinsfan]

If this has to do with the recent personal issues you talked about you have my sympathy.

Please don't do anything major while in the middle of personal upheaval. Even a year or two might not give you enough time to really think things through. Change is hard even when it's good change.

 

[chris2008]

Recently I have learned that some european banks refuse to open accounts for US residents due to increased administration and reporting. When I log in at my swiss online bank I have to confirm that I am not a US citizen.
If so, you will first have to move here and then transfer your financial stuff.

 

[FIREd]

I still pay my medical expenses (for getting a pair of glasses, prescription drug deductibles, etc) using my HSA VISA card in Canada. When I can't use the card, I upload the invoice to my HSA account online and have the money reimbursed (deposited into my US bank account), so if you cannot use up your HSA funds in time, I'm sure you can still use it wherever you are.

It reminds me that I just paid $700 for new prescription glasses last month and I didn't think of using my HSA to pay for them. I should try to submit that invoice.

 

[FIREd]

Recently I have learned that some european banks refuse to open accounts for US residents due to increased administration and reporting. When I log in at my swiss online bank I have to confirm that I am not a US citizen.
If so, you will first have to move here and then transfer your financial stuff.

Yes, as I understand it, this has been a problem due to FATCA (and why I will have to surrender my green card). It would be a bit unnerving to move without the money and transfer it later (hoping that everything goes well)...

 

[Totoro]

Just go with the full-service larger, more expensive established banks at first. Still a pain, but they can handle it. After a few years you are out of the US system, then go discount.

Discount brokers can be tricky, they don't like the hassle. Mine back then also didn't offer migration. I had to signup at new country and close old country account myself. Mind you, that was moving from Belgium to the Netherlands, right next door in Schengen ..

 

[FIREd]

Just go with the full-service larger, more expensive established banks at first. Still a pain, but they can handle it. After a few years you are out of the US system, then go discount.

Discount brokers can be tricky, they don't like the hassle. Mine back then also didn't offer migration. I had to signup at new country and close old country account myself. Mind you, that was moving from Belgium to the Netherlands, right next door in Schengen ..

Wow. Perhaps, I should just go all cash and do a "simple" international bank to bank wire transfer. Then I can figure out the re-investment part.

 

[gerntz]

I only started making IRA to Roth conversions back in 2014, so none of the money has been in the account more than 5 years. The total amount of the conversions (2014-2017) was about $49K and the account is now worth about $67K. So if I understand correctly, I could take the full amount out now, but I would have to pay a 10% penalty on the gain (18K)? I am 44 by the way.

Why isn't leaving the Roth alone, at least till the 5-year mark, the way to go since distributions from it aren't taxable anyway?

 

[Alan]

You have probably researched this already, but be sure you understand the ramifications of high net worth Green Card holders giving up their residency.

Who is a “Covered Expatriate?”

From a tax perspective, the expatriation process has changed since the Heroes Earnings Assistance and Relief Act (HEART Act) passed in June 2008. This Act applies to individuals who relinquish their US citizenship or long term U.S. residency after June 16, 2008 and who either: 1) have an average annual income tax liability of more than $155,000 for the five years preceding expatriation; 2) have a net worth equal to or greater than $2,000,000 on the date of expatriation or termination of permanent residency; or 3) have failed to provide certified compliance with U.S. tax obligations for the five years prior to expatriation. An individual who meets one of these criteria is referred to as a “covered expatriate.

Moving money and assets overseas does not I believe decrease your net worth in the eyes of the IRS.

 

[Alan]

If the UK is representative of other EU countries then it will be almost impossible to open new bank or brokerage account unless you are a resident there.

I don’t believe there are any special things you have to do to inform the Treasury of large bank to bank transfers when moving money overseas. We have moved hundreds of thousands in 2016/17 to buy 2 houses in England. The information you provide to your US bank to show where the money is coming from will be reported by them to the Treasury, and the FBAR reports you file yourself to the Treasury will also show where the money ended up.

If you carry more than $10k cash out of the USA it needs to be declared ahead of time.

 

[Golden sunsets]

Fired-I hope this all goes well for you[emoji120]

 

[Offgrid Organic Farmer]

At one time I lived in Scotland and owned an apartment building there. Then I returned stateside for 10 years before moving to Italy for 3 years.

I was using a US credit union the whole time. I looked at various schemes of moving money back and forth, but really the easiest thing to do is to keep the money in a bank that has branch offices in both locations.

There is no reason that you could not have your money in the stock market stateside while you were living in Paris, or Budapest.

 

[FIREd]

You have probably researched this already, but be sure you understand the ramifications of high net worth Green Card holders giving up their residency.



Moving money and assets overseas does not I believe decrease your net worth in the eyes of the IRS.

Sounds like an updated version of the old Exit Tax. Since I plan to go all cash (and pay the appropriate taxes on the capital gains) before expatriation, I don’t think that It would be an issue for me despite being a “covered expatatriate”.