Making aliya doesn’t mean you need to close your American brokerage accounts. In fact, there are many sound reasons for maintaining assets in America even if you move away. Think twice before converting your American retirement accounts to shekels and bringing them to Israel.
Recently, some American brokerage firms asked their non-resident clients to transfer out their accounts. To the shock of many clients in Israel, major firms decided to end long-term relationships with them. If this has happened to you (or you fear it may) don’t panic! There are U.S. brokerage firms who realize the benefit in holding accounts for law-abiding and tax-paying citizens who just happen to have a non-U.S. address.
As a licensed financial planner in both Israel and America, I have over two decades experience in counseling American olim on the benefits of maintaining an American brokerage firm while living in Israel. Benefits include:
Tax Reporting Benefits
Keeping an American brokerage account makes tax reporting to America easier. Long and short term gains/losses are reported according to the IRS’s requirements. This makes tax filing easier (and cost efficient) on 1099s, FBARs, and other forms that Americans must file.
Tax-Deferred Benefits
Keeping an American IRA (Individual Retirement Account, often held through a U.S. brokerage company) or 401(k) account means you can maintain the tax-deferred status of your funds. If you transfer these accounts out of America, you lose the tax benefits and may owe penalties as well.
Safety Benefits
American brokerage accounts have an extremely high level of transparency and government regulation. While SIPC insurance can’t guard an investor against regular market volatility, the protection gives millions of investors peace of mind.
You Can Keep American IRAs
Keep in mind that an American brokerage account can’t replace your local Israeli bank account for day-to-day services. Nor can it hold Israeli pension and Israeli tax-free savings accounts (which may still be taxable in America).
However, an American IRA account is the most common tool used to maintain the tax-deferred status of retirement funds. For help managing your American brokerage/retirement accounts in Israel, watch this ten-minute video and call Profile Investment Services, Ltd., (02) 624-2788.
Neither Profile nor PRG provides tax or legal advice. Consult an accountant or an attorney on such matters before taking any action.
Douglas Goldstein, CFP®️ 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 September 20, 2016.