Can I Move My IRA to an Offshore Account?
If your retirement account funds have not reached their 59 1/2-year distribution deadline, consider taking them offshore for further investment options – real estate, precious metals and currencies among them.
Establishing an offshore IRA requires extensive tax advice at its outset. Learn the six steps necessary to transferring it offshore for asset protection, privacy and investment diversification.
Taxes
People have long had the option to take their retirement accounts offshore by setting them up as offshore LLCs. Such structures allow their IRA owners to make investments that may not be offered by domestic brokers; such as international real estate, bank CDs from foreign banks, precious metals or other investments.
Traditional, SEP/SARSEP, SIMPLE, and ROTH IRAs can all be transferred offshore for tax-exempt savings accounts that help prepare for retirement. Depending on your income level, contributions may even be deducted from taxes.
Most large IRA custodians will only allow you to invest in stocks, bonds and mutual funds; an offshore custodian allows for much broader asset investing options including real estate and business interests overseas – as well as UBIT blockers and protection against civil claimants.
Investments
Investment IRAs can be an integral component of your retirement plan, providing an effective means to diversify savings while protecting them from civil creditors and corrupt governments. Unfortunately, traditional IRA custodians limit your options and make money off selling you specific investments; with a self-directed IRA you take control over your retirement account and can invest in more opportunities.
Many investors are opting to move their IRAs offshore in order to lower fees and access a wider selection of investment opportunities. Doing this involves setting up an offshore LLC, opening bank and investment accounts abroad, and then moving assets from your US custodian over to this new entity.
An offshore IRA LLC allows you to transfer tax exempt retirement accounts such as your 401(k), SEP, SIMPLE, ROTH Keogh or 403(b). Vested defined benefit accounts can also be transferred, though you must wait until they become fully vest before doing so.
Transfers
There are two approaches to moving an IRA offshore: like-kind transfers or creating an offshore IRA LLC. The latter option offers greater control and opens up a world of investment possibilities, including non-US real estate, precious metals and currencies – as well as eliminating almost all IRA custodian fees altogether.
For an offshore IRA LLC to function, it requires finding a custodian who understands and supports its structure. While finding one may prove challenging, it’s crucial that they be qualified.
Most large IRA custodians only allow investments in stocks, mutual funds and other traditional investments; but an offshore IRA LLC offers greater investment possibilities, including non-US real estate and interests in offshore companies. An offshore IRA LLC may also help those wanting to diversify their retirement portfolio with foreign investments – thus decreasing risk while increasing return.
Custodians
Custodians are institutions that manage and protect an individual’s investment funds, as well as prepare and file necessary tax filings on his or her behalf.
One person may hold multiple IRAs with various custodians. When moving their offshore IRA, they must transfer all assets from their current custodian to their new one in an orderly fashion so as to comply with IRS rules and avoid violations. This process can often be complex.
Selecting an offshore IRA custodian that supports your desired investments (real estate or private equity, for instance). Also be mindful of their fees and pricing structure when making this important decision.
Self-directed IRA custodians will allow you to set up an offshore LLC and direct your IRA investments towards that entity, giving you greater freedom when selecting investments that fit with your goals and remain compliant with IRS rules.
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