Forced IRA liquidation
Sep 20th 2018, 8:59 pm
#1
Just Joined
Thread Starter
Joined: Sep 2018
Posts: 3
Forced IRA liquidation
Hello all,
I'm new to this forum business, so please excuse any etiquette mistakes until I get the hang of it.
I'm a UK citizen living in the UK. I lived in the US for 12 years. During that time, I paid into a 401k. On leaving the US ten years ago, I rolled it over into an IRA because I was no longer paying US taxes. This has gone fairly well until this week, when I received a letter from my US financial institution that they will no longer service IRA accounts for residents of certain countries, including the UK. They are giving me until mid December to figure out what to do with it or else they will take tax, early withdrawal penalties and mail me a cheque for the rest. Possibly I may be able to avoid the taxes due to the US-UK tax treaty, but what I really want to do is to roll it over into another IRA or similar to avoid any penalties and keep it growing until I retire. I'm also hearing that HMRC may want up to 55% of it if I brought the balance to the UK as cash.
I'm thinking I may not be the only person facing this situation. I would be interested to hear about anyone else who has faced or is facing it and what can possibly be done about it.
Thanks!
I'm new to this forum business, so please excuse any etiquette mistakes until I get the hang of it.
I'm a UK citizen living in the UK. I lived in the US for 12 years. During that time, I paid into a 401k. On leaving the US ten years ago, I rolled it over into an IRA because I was no longer paying US taxes. This has gone fairly well until this week, when I received a letter from my US financial institution that they will no longer service IRA accounts for residents of certain countries, including the UK. They are giving me until mid December to figure out what to do with it or else they will take tax, early withdrawal penalties and mail me a cheque for the rest. Possibly I may be able to avoid the taxes due to the US-UK tax treaty, but what I really want to do is to roll it over into another IRA or similar to avoid any penalties and keep it growing until I retire. I'm also hearing that HMRC may want up to 55% of it if I brought the balance to the UK as cash.
I'm thinking I may not be the only person facing this situation. I would be interested to hear about anyone else who has faced or is facing it and what can possibly be done about it.
Thanks!
Sep 20th 2018, 9:39 pm
#2
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Joined: Mar 2015
Location: NC, USA (ex Yorkshire)
Posts: 4,375
Re: Forced IRA liquidation
You'd likely want to do a direct transfer rather than a rollover.
The reason is that a rollover will mail you a check minus the witholding and then you deposit that and have to make up the rest temporarily.
Direct transfer you don't have the money in your accounts so it's for the whole amount.
Many brokers offer what's called ACATS for transferring online and it takes about 5 days.
The reason is that a rollover will mail you a check minus the witholding and then you deposit that and have to make up the rest temporarily.
Direct transfer you don't have the money in your accounts so it's for the whole amount.
Many brokers offer what's called ACATS for transferring online and it takes about 5 days.
Sep 20th 2018, 9:53 pm
#3
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Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,128
Re: Forced IRA liquidation
That is really tough. No experience with this. We are U.K. citizens living in the U.K. but are also US citizens, with IRAs in the US. This applies to myself, wife and son, all with IRAs and Roth IRAs. We moved our IRAs and 401ks to Vanguard before we moved because they said they allowed existing customers to continue to have accounts with them when they relocate overseas. I hope what you are experiencing is not going to be a standard across the industry.
it is possible I think that if you do have to liquidate your IRA and bring it to the U.K. that it would count as a lump sum and only be taxed in the USA, but someone more knowledgeable would have to chime and say what the U.K. tax situation will be.
it is possible I think that if you do have to liquidate your IRA and bring it to the U.K. that it would count as a lump sum and only be taxed in the USA, but someone more knowledgeable would have to chime and say what the U.K. tax situation will be.
Sep 20th 2018, 9:55 pm
#4
BE Forum Addict
Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,128
Re: Forced IRA liquidation
You'd likely want to do a direct transfer rather than a rollover.
The reason is that a rollover will mail you a check minus the witholding and then you deposit that and have to make up the rest temporarily.
Direct transfer you don't have the money in your accounts so it's for the whole amount.
Many brokers offer what's called ACATS for transferring online and it takes about 5 days.
The reason is that a rollover will mail you a check minus the witholding and then you deposit that and have to make up the rest temporarily.
Direct transfer you don't have the money in your accounts so it's for the whole amount.
Many brokers offer what's called ACATS for transferring online and it takes about 5 days.
Sep 20th 2018, 11:40 pm
#5
BE Forum Addict
Joined: Mar 2015
Location: NC, USA (ex Yorkshire)
Posts: 4,375
Sep 23rd 2018, 3:05 pm
#6
Lost in BE Cyberspace
Joined: Jul 2008
Location: Portlandia Metro
Posts: 7,425
Re: Forced IRA liquidation
I have seen a similar previous thread on this subject, I think the person has a Fidelity IRA. I will see if I can find the previous thread.
Are Fidelity closing non-resident accounts
https://britishexpats.com/forum/usa-57/frozen-401k-ira-901989/
Are Fidelity closing non-resident accounts
https://britishexpats.com/forum/usa-57/frozen-401k-ira-901989/
Last edited by mrken30; Sep 23rd 2018 at 3:07 pm.
Sep 26th 2018, 6:10 pm
#7
Forum Regular
Joined: Apr 2014
Location: Northern California
Posts: 53
Re: Forced IRA liquidation
Hello all,
I'm new to this forum business, so please excuse any etiquette mistakes until I get the hang of it.
I'm a UK citizen living in the UK. I lived in the US for 12 years. During that time, I paid into a 401k. On leaving the US ten years ago, I rolled it over into an IRA because I was no longer paying US taxes. This has gone fairly well until this week, when I received a letter from my US financial institution that they will no longer service IRA accounts for residents of certain countries, including the UK. They are giving me until mid December to figure out what to do with it or else they will take tax, early withdrawal penalties and mail me a cheque for the rest. Possibly I may be able to avoid the taxes due to the US-UK tax treaty, but what I really want to do is to roll it over into another IRA or similar to avoid any penalties and keep it growing until I retire. I'm also hearing that HMRC may want up to 55% of it if I brought the balance to the UK as cash.
I'm thinking I may not be the only person facing this situation. I would be interested to hear about anyone else who has faced or is facing it and what can possibly be done about it.
Thanks!
I'm new to this forum business, so please excuse any etiquette mistakes until I get the hang of it.
I'm a UK citizen living in the UK. I lived in the US for 12 years. During that time, I paid into a 401k. On leaving the US ten years ago, I rolled it over into an IRA because I was no longer paying US taxes. This has gone fairly well until this week, when I received a letter from my US financial institution that they will no longer service IRA accounts for residents of certain countries, including the UK. They are giving me until mid December to figure out what to do with it or else they will take tax, early withdrawal penalties and mail me a cheque for the rest. Possibly I may be able to avoid the taxes due to the US-UK tax treaty, but what I really want to do is to roll it over into another IRA or similar to avoid any penalties and keep it growing until I retire. I'm also hearing that HMRC may want up to 55% of it if I brought the balance to the UK as cash.
I'm thinking I may not be the only person facing this situation. I would be interested to hear about anyone else who has faced or is facing it and what can possibly be done about it.
Thanks!
Sep 26th 2018, 6:26 pm
#8
Lost in BE Cyberspace
Joined: Jul 2008
Location: Portlandia Metro
Posts: 7,425
Re: Forced IRA liquidation
I wonder if these people could help.
https://thunfinancial.com/home/ameri...s-closed-2015/
I know little about this organisation, but it you're near London, it may be worth a visit.
https://www.americansabroad.org/aca-events/
https://thunfinancial.com/home/ameri...s-closed-2015/
I know little about this organisation, but it you're near London, it may be worth a visit.
https://www.americansabroad.org/aca-events/
Last edited by mrken30; Sep 26th 2018 at 6:35 pm.
Oct 4th 2018, 12:07 pm
#9
Forum Regular
Joined: Mar 2017
Posts: 64
Re: Forced IRA liquidation
I was in a similar situation, but by keeping my head low, my account was frozen rather than closed.
This means that I can't do any dealing, but I retain the tax-deferred status.
Perhaps you could negotiate with your institution so that you change the account status to frozen; this would have the advantage, if you keep it open until your are 59 1/2, of not having to pay the penalties.
This means that I can't do any dealing, but I retain the tax-deferred status.
Perhaps you could negotiate with your institution so that you change the account status to frozen; this would have the advantage, if you keep it open until your are 59 1/2, of not having to pay the penalties.
Oct 4th 2018, 1:35 pm
#10
Lost in BE Cyberspace
Joined: Jul 2008
Location: Portlandia Metro
Posts: 7,425
Re: Forced IRA liquidation
I'm not sure if it's against the rules, but it would be nice to know which companies are doing this so others can be prepared.
Mar 25th 2019, 8:21 pm
#11
Just Joined
Thread Starter
Joined: Sep 2018
Posts: 3
Re: Forced IRA liquidation
Dear all,<br /><br />I'm pleased to say that I was finally able to resolve my IRA situation and move the account to a new institution and hence avoid the liquidation. I attempted to share the details so that those who were facing a similar situation could also avoid this. However, this has been forbidden by the moderator, so if you wish to know more, it looks like you will have to contact me directly.<br /><br />Thanks!
Mar 25th 2019, 8:54 pm
#12
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,439
Re: Forced IRA liquidation
Dear all,<br /><br />I'm pleased to say that I was finally able to resolve my IRA situation and move the account to a new institution and hence avoid the liquidation. I attempted to share the details so that those who were facing a similar situation could also avoid this. However, this has been forbidden by the moderator, so if you wish to know more, it looks like you will have to contact me directly.<br /><br />Thanks!
Mar 26th 2019, 6:31 am
#13
Forum Regular
Joined: May 2018
Location: North Yorkshire
Posts: 80
Re: Forced IRA liquidation
I am very interested to know who you were able to transfer your 401K to, as I am sure others are, but until you have made at least three (?) posts you can't access private messages. Maybe if you reply to this post with at least the name of the investment manager, the mods will allow it to stand?
Mar 26th 2019, 9:56 pm
#15
Just Joined
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Joined: Sep 2018
Posts: 3
Re: Forced IRA liquidation
Yes, private messages are blocked for now. However, please note that in my case, we were dealing with an IRA, not a 401k. As you may know, these are not quite the same thing.
