If you’re an American who moved to Israel and left your Individual Retirement Account (IRA) in America, get ready for important changes, some of which could help you out. 

If having an address in Israel is creating a problem with your IRA, please contact Sandy in my office (sandy@profile-financial.com) to see what easy solutions are available to you. 

Delay paying U.S. tax 

Under the old rules, the IRS required withdrawals from IRAs at age 70 ½. That meant that you would then have to start paying U.S. tax on the withdrawn money. The reason for the law was that the IRS wanted to start collecting taxes on money that had never been taxed before. 

With the new rules, you can wait until you’re 72 to start taking distributions. That’s extra time that you can keep your money invested, and protected from American taxes. (This article is for educational purposes only and should not be considered tax advice. Consult a qualified tax professional to learn about your specific tax obligations both in the U.S.A. and in Israel.) 

Corona: No need for an RMD (Required Minimum Distribution) 

Because of the recent U.S. Government’s emergency measures due to the corona virus, people can opt out of taking their required minimum distributions in 2020. Ask your accountant for details. 

Inherited IRAs have new rules, too 

Previously, folks who inherited an IRA from a parent (or other non-spouse benefactor) could keep the money in the IRA for the rest of their lives, only having to take certain distributions annually. That has changed, too. Now you need to either withdraw the money all at once or over a ten-year period. Spouses, and certain other qualified individuals, can roll the inherited IRAs into their own names, but children who inherit IRAs now need to empty them out… and pay taxes on the withdrawals… within a decade. 

Don’t worry if you’ve already inherited an IRA and have already begun taking required minimum distributions under the old rules. If that’s your case, you don’t need to change anything. The new rule only applies to people inheriting IRAs starting in 2020. 

If you need help, please contact me (doug@profile-financial.com) and read my book, The Inheritance Book, at Profile-Financial.com/books 

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 23, 2020.

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