dunroving

Thank you - will peruse over the weekend. It seems as has been said that financial institutions just couldn't be bothered with the hassle and the PA is a convenient excuse. It is ironic when people live an increasingly global lifestyle that these things are getting harder!

nun

+1
I would add that you should also open a ROTH IRA before leaving the US. I wrote to Vanguard about this last week and they confirmed that existing customers can manage their accounts wherever they live, but they do not allow non US residents to open new accounts. Don't know if they'd allow an existing non resident customer to open an IRA. I'd also recommend Vanguard for US citizens in the UK because it's ETFs are HMRC reporting funds and a way out of the. PFIC/reporting fund "Catch-22"

JAJ

Obtaining a physical U.S. street address to use for U.S. financial purpose would seem to be worthwhile for any U.S. citizen planning to spend time outside the United States. There are many mail forwarding services in operation, especially in Florida, Texas and South Dakota. These serve citizens who regularly move around the United States, but can just as easily be used by those who spend long periods of time outside the U.S.

dunroving

I agree, in much the same way as UK expats find it useful to use mum and dad's residential address. But the US banks and financial institutions (or at least the interface people) are increasingly insisting that you actually live in the US. Even to the point that I have found some posts via Google from US citizens living overseas who have found that their institutions (I think either TDW or Schwab was one in particular) use their IP address to identify that they are overseas and ask them to close their existing accounts.

It all seems rather Machiavellian.

In the meantime, I have received further cryptic messages from TIAA-CREF, not even from the person I was speaking with for 90 minutes yesterday, saying the following:

"TIAA-CREF will not impede a request for you to rollover your funds to an IRA you might have or be able to establish elsewhere. Based on our legal department's interpretation, we simply cannot allow foreign residents to establish a new IRA with us. I apologize, but this requirement is not flexible and cannot be exceptioned."

- The outcome of the conversation yesterday was that I was supposed to receive verbatim an explanation of what part (chapter, verse) of legal code they are interpreting, and/or the verbatim text from the relevant TIAA policies. The wording above is just a basic brush-off and I'm not even sure if the person knows of the conversation I had.

- Interestingly, the guy seemed to be saying at one point, with heavy irony, "If you can give us a US residential address that you will receive mail at (hint, hint), we can allow you to open an IRA" This hints at the sort of arrangement JAJ refers to above.

I will be in Georgia in a couple of months for two weeks. I am of a mind to simply call their center and open an IRA by phone, using the Georgia address (they are old friends and have already said I can use their address).

***As per Nun's amendment, I should have said open a ROTH IRA before you leave the US, as that's the one with the tax advantage for the rollover.***

dunroving

This is the part that is irking me at the moment. I already have accounts with TIAA-CREF. Opening another type of account in order to roll over funds is not too far removed from simply moving funds into a new mutual fund within TIAA-CREF

(I mean from the perspective of the legal side, which is all about determining identity under the Patriot Act. Opening and IRA is different financially than just moving funds to a different mutual fund within the same 401a).

nun

Using an relative or friend's address might let you open a new account, but it might also complicate, or open you up to, state taxes. The mail forwarding service used by people in RVs etc are in states with no income tax, you seem to setup state domicile so I'd check the state tax implications of using them. Also having an address in a state and being domiciled in that state doesn't necessarily make you a resident of that state.....and obviously that would complicate things when you claim to be a foreign resident for things like health insurance and FEIE etc. TIAA-CREF specifically limits new brokerage accounts to US residents so just getting a South Dakota mail drop, but never spending any time there, probably wouldn't get you around the restriction.

dunroving

Yes, I had wondered about that, although I have not looked into what state taxes would be due on an IRA (presumable none if I roll to a Roth?) and other TIAA-CREF pension funds (again, presumably none as I was never due state taxes on them when I lived there).

The plan would be to use the US address to open the IRA and once it was up and rolling, revert back to my UK address. That would fall under TIA-CREF's standpoint on the issue - hey won't hinder me rolling into an IRA as a non-resident if I can open one.

nun

I think some emails and letters to a few politicians and newspapers might be in order. I don't expect them to do anything other than soothe your frustration, but who knows...........US citizens being unable to rollover to IRAs might get some interest. I'd also keep at TIAA-CREF for a more detailed explanation. I have money with them and I'll annoy them about it now.

dunroving

Power in numbers!

I did find, among the many interesting sites on the effects of the Patriot Act, three links to places to complain (I didn't save them but it wouldn't be hard to find them again). I think one of them may even have been a US Treasury site. If I find them I will post here.

JAJ

While such instances may have happened, I am not convinced it is in any way systematic. Simply for the reason that U.S. citizens temporarily outside the United States, or even those working in the U.S. for foreign corporations, may be accessing their accounts from a non-U.S. IP address. They can't tell everyone in that situation to close their accounts.

And if escalated that way, a solution for a U.S. citizen overseas is to establish a U.S. based VPN account that gives access to a U.S. located IP address.

It is an irony, however, that after all the progress made between the 1970s-1990s to remove capital controls, that they have returned in a new guise.


Perhaps "cannot" should have been re-phrased as "choose not to". In the absence of explaining what in particular their legal department concluded.

JAJ

Depends on how hard they look. They may be fine with the idea that a "U.S. resident" is someone who can supply a U.S. mailing address.

As for whether obtaining a mail forwarding address involves establishing a state domicile, including drivers license/ID card and voting registration, it's certainly possible for it to work that way but it doesn't have to.

And even if someone did obtain, for example, a Florida drivers license based on a mail forwarding address, I don't see any specific concern in continuing to file IRS tax returns based on a foreign address. In the highly unlikely event that the IRS were to ask, just explain and provide evidence of foreign residence. And note that eligibility for the foreign earned income exclusion requires foreign residence or physical presence, but does not require a foreign domicile.

durham_lad

That never occurred to me, as this last few years we have spent many months out of country (last year was 5 months in Australia, year before 6 months in UK and Europe). We like to escape the Texas summers.

I log on regularly and if I thought this really was an issue I would have to start using VPN.

J.JsOH

I am late coming to this thread and I looked through and didn't see comment about the questions that come to my mind,
Does it matter that I am merely a non-resident alien ? I have existing IRA and Roth already established from the time I lived in US.
As a NRA, do I still get entitlement to a personal allowance on taxable income applicable to the rolling from IRA to Roth ?
Thanks and sorry if I overlooked this elsewhere in IRA threads.
John

nun

Yes you do. You can get exemptions, but no standard deduction, just itemized deductions. You pay US tax on the rollover, it is not taxable in the UK.

J.JsOH

Thanks Nun, I been losing touch on these fine points lately.
If you dont mind, why is the rollover not taxable in UK, on face of it it would seem to be UK taxable income, but thinking on it more maybe it is because the money is staying inside a pension wrapper.
I should read back I guess, this seems like an advantage worth employing.