A middle-aged couple that recently made aliya told me that they were concerned about how to handle their IRAs (Individual Retirement Accounts) in America. They thought that the only choices were to leave these assets with a broker in a different time zone or else transfer the funds to their Israeli shekel account.
If you have U.S. retirement funds, you do not need to move the accounts. In fact, by taking the money out of IRAs and bringing it to Israel, you might be creating an unexpected tax bill and early withdrawal penalties.
You can still handle the accounts from Israel
I generally advise olim who have IRAs to leave the account with an SIPC-insured brokerage firm. Even if you created a financial plan while living in the United States, you should create a new post-aliya plan. Choose a financial professional who is familiar with both your American investments and life in Israel to guide you through this process. And when it’s time to implement the new plan, choose a local firm that provides quality service while holding your account in America with familiar investments (stocks, bonds, mutual funds, ETFs, CDs, etc.).
New olim should consider how much of their money they should bring to Israel with them. After all, your new life is in a shekel-based market. Determine your cash-flow needs, consider the importance of currency diversification, and divide your money in proportion with the asset allocation model you have developed in your financial plan…. You don’t have a financial plan? Get to work on it right away, since that will be the blue-print for your successful financial aliya. Since the focus of your new life, your salary, your checking account, and your new pension plans will now be based in Israel, having geographical diversity (by keeping your IRAs in America) may be prudent. At the end of the day, know that you have choices about where to place your funds and that you can handle your U.S. investments from your new home.
For more tips on how to handle your U.S dollars post-aliya, read: Profile-financial.com/money-aliya.
Douglas Goldstein, CFP®, GFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published April 22, 2015. Updated August 2023