Can I Move My IRA to an Offshore Account?
Moving an IRA offshore requires finding a custodian who offers offshore IRA LLC structures, as well as selecting an offshore jurisdiction which provides investment protection and privacy.
An IRA LLC structure can be an excellent way to regain control over one of your most critical investments, and gain access to new investments that offer greater returns while protecting you against government confiscation in this era of sovereign defaults.
Vested IRAs
As a newly retired individual with access to a defined benefit plan, you may take your account overseas as long as it has become fully vested. Typically this would be through one of your former employer’s retirement accounts; check your plan documents to be sure.
An offshore self-directed IRA allows for investments beyond stocks, bonds and mutual funds; with one being real estate. Real estate, precious metals, foreign currencies and even interests in companies operating outside the US may all qualify. An asset protection device which also offers higher returning opportunities. Having professional tax input from day one is necessary in order to avoid costly mistakes which could disqualify or incur penalties in moving an IRA offshore; always consult a specialist before moving your IRA offshore.
Defined Benefit Plans
Many defined benefit (DB) plans promise a series of lifetime payments at retirement, calculated using an equation incorporating factors like length of service and salary history. Employers are responsible for investing their assets so as to fulfill this promise, and must periodically assess if their investments hold enough value to cover these promised benefits.
Assets held under DB plans tend to be protected from creditors should you declare bankruptcy, provided you transfer these assets after leaving your company to an offshore account where they remain safe from claims from creditors.
VRS can assist with moving your defined contribution account to an international custodian. We can also assist with cash balance or profit sharing plans as well as SIMPLE or SEP IRAs. In addition, VRS provides actuarial services* to support the management of defined benefit plans including valuation and expense reporting as well as PBGC filings and Form 5500 support.
Employer IRAs
Once you leave an employer after 10 or more years and are fully vested, your employer-sponsored retirement accounts can be transferred offshore. First, cash should be removed from a US custodian that profits by selling investments, then an offshore IRA LLC is formed with you as its manager through an LLC operating agreement; your IRA funds can then be invested directly into it, giving you complete control.
From an American tax perspective, this structure can be extremely complex; any mistake could disqualify your IRA (and lead to tax liabilities or missed filing penalties for FBAR filings) or incur large penalties due to noncompliance. Therefore, professional guidance from the start is key and be wary of companies who treat FBAR filings like commodities without providing guidance or assistance with filing requirements; our firm offers expert US tax advice regarding these structures and is well versed in them.
Self-Directed IRAs
Self-directed IRAs (SDIRAs) provide more investment freedom than traditional IRA accounts, including access to alternative assets like foreign real estate and physical gold as well as cryptocurrency and ICO investments. NerdWallet advises seeking advice from an advisor before investing in SDIRAs.
An offshore structure allows an SDIRA to take advantage of higher yields and greater asset protection from the US government, but must be carefully managed according to IRS rules and account statements may contain incomplete or misleading information; verify all details prior to investing illiquid or difficult-to-value alternative investments.
SDIRAs require custodians who understand international transactions as well as any additional tax requirements associated with an offshore location. An experienced financial professional with knowledge in international tax and banking may help clients to navigate these complexities; an offshore SDIRA will likely require filing an FBAR starting the first year.
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