“They’re closing down the pension plan I had in America,” a new client told me. “They say that if I don’t do all of these complicated steps, the account will be subject to a huge tax bill!” He really needed to get complete control of his U.S. retirement account, but he didn’t know the rules.
Take control of your retirement account before it’s too late
Many Americans living overseas have a 401(k), 403(b), or IRA account that remains in America. These folks planned to leave it there until their retirement, which generally makes sense. However, they might be forced to move it for any of a number of reasons like…
- The pension plan is shutting down and distributing funds to the participants.
- The bank or brokerage firm is closing all accounts of clients who live overseas.
If these people ignore messages they get from their financial institution, the company may just liquidate the portfolio and mail them a check. This payment could trigger a huge tax bill, and possibly a 10% penalty on top of that. So even before you get kicked out by a pension company, it pays to take control of your funds.
The simplest solution
An easy way to handle your retirement monies while still protecting them from U.S. taxation, is to roll the money into an IRA (Individual Retirement Account). In fact, for the fellow mentioned above, from our office in Jerusalem, we prepared the paperwork, set up a ‘self-directed’ IRA for him, and instructed the old brokerage firm to transfer over all the assets into the new account. That direct custodian-to-custodian transfer meant that there was no change in tax status, and following the transfer, we were able to help the client rebalance his portfolio to match his goals and tolerance for risk.
Does it take a long a time?
In order to get your account up and running, you’ll need to talk with us and sign the required paperwork, but the whole process won’t require much time. If you’re concerned about your U.S. retirement account, let’s start a conversation (email@example.com or 02-624-2788).
Published August 24, 2021.