Can I Move My IRA to an Offshore Account?
Before moving your IRA offshore, the first step should be identifying eligible accounts to move. In general, only vested IRA accounts can be moved offshore.
Non-traditional custodians offer more diverse investments, including physical gold and foreign real estate that may not be accessible through traditional custodians; however, these structures come at a greater upfront cost.
Taxes
As a general guideline, IRA assets may be moved offshore; however, seeking professional tax advice before doing so should always be sought first. Any transfer will trigger immediate tax liabilities that must be fulfilled.
Most US custodians earn money selling investments into your IRA account and don’t want you taking control of it outside their hands. To do this, it would be necessary to switch custodians who offer Self Directed IRAs; then move retirement funds offshore via an LLC; taking full control over investing it as you please, including investing it in foreign real estate assets.
This strategy works for most tax-exempt accounts, such as 401(k), Roth IRAs, SEP IRAs and Keogh plans. Furthermore, some defined benefit plans may also qualify if vested; taking your IRA offshore offers diversification, higher returns and protection from civil creditors during uncertain times.
Investments
Self-directed IRAs allow investors to invest in investments otherwise unsuitable for an IRA account, such as alternative assets and real estate investments. But be wary: some of these investments might not come with the same legal and regulatory protections that traditional IRA investments do.
Investments such as these can help diversify your portfolio and generate additional retirement income, but beware: each investment carries its own risks that could cause it to lose value in the short term.
Once again, it’s important to consider the fees associated with alternative investments. They could be higher than with traditional investments and this can detract from your returns. Furthermore, some may not provide complete financial information or may be difficult to liquidate; thus, you should carefully evaluate both the investment itself as well as its promoter.
Security
An offshore account can offer the benefit of holding assets in different currencies, giving access to international finance. But this convenience comes at the cost of high fees and possibly not being fully insured – something to keep in mind before opening one!
Dependent upon where you decide to open an offshore account, certain investments could be limited depending on where it’s set up – for instance real estate may not be directly investable and any distribution prior to age 59 1/2 will incur both regular income tax and an additional 10% penalty tax.
Before making the decision to transfer your IRA offshore, carefully consider your priorities and legacy goals before consulting with a tax professional about your options. As with any investments, investments may incur risks including the possible loss of principal. Before investing, please review both the fund prospectus and summary prospectus before investing.
Compliance
One can move their IRA account offshore to take advantage of greater investment options and avoid fees, but this process can have serious tax repercussions that should only be undertaken with assistance from an expert.
IRAs allow investors to invest in real estate and assets not traded publicly, such as private mortgages and precious metals, although the IRS imposes stringent guidelines regarding what can be invested in through an IRA.
Move an IRA between institutions without incurring taxes using direct trustee-to-trustee transfers. This method provides the best means of doing this without incurring tax bills; however, please remember that this is different than rolling over, as any taxes owing must first be settled before investing can commence in a new IRA. Also note that an IRA cannot be moved into an offshore LLC owned by U.S. citizens or companies as this could trigger unrelated business income tax (UBIT). Instead, an offshore IRA LLC should only be owned by non-U.S. persons/companies to prevent unrelated business income tax (UBIT).
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