Clearing out US retirement accounts

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internet_explorer
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Clearing out US retirement accounts

Post by internet_explorer »

For example, if you had a retirement account in US like IRA, but have left the US. Withdrawal and tax penalties are significant. However, it should be possible to transfer that wealth into your local jurisdiction while paying little in tax.

This is untested, but conceptually:
1. Find a highly volatile asset of which bets can be taken in both directions (long / short)
2. Create a brokerage account outside of US, that is subject to your lower tax rules
3. make the riskiest bet possible in your retirement account, then take the other side with your local account.
e.g. long XYZ 3x ETF and short XYZ 3x ETF in your other account
4. repeat until the retirement account is drained, and your non-US account has most of the funds

The cost incurred should simply be account and trading fees, which might be in the low single digit % range.

Has this been done? It seems rather simple conceptually so perhaps it happens quite a bit.


=== edit / summary ===
To help anyone coming across this at a later date, one might want to withdraw your IRA / 401k early and pay the penalty because:
- investment gains in the retirement accnt are highly taxed

- estate planning gets complicated above ~$60K

- you might not get a say if the US or your provider decides to mess with your account. If your time horizon for a retirement account is at 20+ years, companies like fidelity may substantially switch their biz models in a way which is not beneficial to NRAs, or governments may change policies that is detrimental to the account.


Simply withdrawing and paying the penalty can be reduced by doing this over time. For example, the 12% tax bracket currently applies to the <$40k, so withdrawing that amount every year would probably be somewhat tax efficient, although you have to pay a higher tax rate on profits.

Large accounts may also benefit from tax-loss harvesting style strategies where one sells big losers in your taxable account but gets similar exposure elsewhere

There's a guide here: https://hodgen.com/ira-distributions-fo ... patriates/

There are other options discussed, such as moving to a tax treaty country for a year, like Thailand. I don't have details but maybe someone with more experience would like the share.
TedSwippet wrote: Sat Jul 02, 2022 11:32 am Pretty much. Not exactly an encouraging picture, is it? I'll just add a couple of points.

Firstly, if you live in a country with a US tax treaty, and in particular with a US estate tax treaty, then some areas of this are less uncomfortable. For example, most (though not all) estate tax treaties raise the exemption from a miserly $60k to the same level as allowed to US citizens, currently around $11mm (but this of course could change, either upward or downward). And some income tax treaties reserve tax to the country of residence only, which eliminates any US income tax issues.

And secondly, depending on where you plan to live in future, it is worth seriously considering whether it will be worthwhile saving into an IRA or 401k plan at all. Probably sensible to capture the full employer match, depending perhaps on the percentage offered, but may require serious thought before committing beyond that.
Last edited by internet_explorer on Sat Jul 02, 2022 10:13 pm, edited 6 times in total.
Valuethinker
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Re: Clearing out highly taxable accounts

Post by Valuethinker »

internet_explorer wrote: Mon Jun 27, 2022 8:11 am For example, if you had a retirement account in US like IRA, but have left the US. Withdrawal and tax penalties are significant. However, it should be possible to transfer that wealth into your local jurisdiction while paying little in tax.

This is untested, but conceptually:
1. Find a highly volatile asset of which bets can be taken in both directions (long / short)
2. Create a brokerage account outside of US, that is subject to your lower tax rules
3. make the riskiest bet possible in your retirement account, then take the other side with your local account.
e.g. long XYZ 3x ETF and short XYZ 3x ETF in your other account
4. repeat until the retirement account is drained, and your non-US account has most of the funds

The cost incurred should simply be account and trading fees, which might be in the low single digit % range.

Has this been done? It seems rather simple conceptually so perhaps it happens quite a bit.
A general principle (varies by country).

Tax avoidance (legal) becomes tax evasion (illegal) when there is a "sham transaction".

Example of same would be undertaking an economic transaction one way in a jurisdiction. And undertaking an exactly opposite transaction in effect the other way in another jurisdiction.
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Re: Clearing out highly taxable accounts

Post by 123 »

As with any trading activity you have no guarantee that the actual direction of the market will move in accordance with your expectations. If you have unlimited time perhaps you might be willing to wait it out. But while you are waiting you likely have exchange rate variations to toss into the mix.
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Re: Clearing out highly taxable accounts

Post by internet_explorer »

Valuethinker wrote: Mon Jun 27, 2022 10:45 am ...

A general principle (varies by country).

Tax avoidance (legal) becomes tax evasion (illegal) when there is a "sham transaction".

Example of same would be undertaking an economic transaction one way in a jurisdiction. And undertaking an exactly opposite transaction in effect the other way in another jurisdiction.
That was very useful, thanks. I'm not familiar with that definition you mentioned, and will look into it. Is there a history of this trade resulting in legal penalties?
Last edited by internet_explorer on Mon Jun 27, 2022 11:33 am, edited 2 times in total.
Topic Author
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Re: Clearing out highly taxable accounts

Post by internet_explorer »

123 wrote: Mon Jun 27, 2022 10:52 am As with any trading activity you have no guarantee that the actual direction of the market will move in accordance with your expectations. If you have unlimited time perhaps you might be willing to wait it out. But while you are waiting you likely have exchange rate variations to toss into the mix.

Yep. Finding the right trade is key, if it is legal. Ideally something which can move up or down ~50% in a matter of days.
Which, if it goes in the wrong direction, the trade can be tried again.
Mike Scott
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Re: Clearing out highly taxable accounts

Post by Mike Scott »

Have you looked for tax advice in your current country of residence?
yog
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Re: Clearing out highly taxable accounts

Post by yog »

internet_explorer wrote: Mon Jun 27, 2022 11:21 am
123 wrote: Mon Jun 27, 2022 10:52 am As with any trading activity you have no guarantee that the actual direction of the market will move in accordance with your expectations. If you have unlimited time perhaps you might be willing to wait it out. But while you are waiting you likely have exchange rate variations to toss into the mix.

Yep. Finding the right trade is key, if it is legal. Ideally something which can move up or down ~50% in a matter of days.
Which, if it goes in the wrong direction, the trade can be tried again.
The trade you describe is not legal, and resulted in one hedge fund paying a large settlement.

There is a much more complex trade currently being exploited which has not yet passed scrutiny.

Search: susquehanna propublica
Topic Author
internet_explorer
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Re: Clearing out highly taxable accounts

Post by internet_explorer »

Mike Scott wrote: Mon Jun 27, 2022 11:26 am Have you looked for tax advice in your current country of residence?
there aren't any taxes for most investments, so there isn't a lot of to optimize here.I am familiar with the various penalties for withdrawing from a US retirement account, though.
Just mostly hoping to get rid of all US assets to make life simpler in the future, since US paperwork is really painful
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Re: Clearing out highly taxable accounts

Post by LadyGeek »

For the record, discussions of dishonest behavior or bypassing the law are totally unacceptable.

The approach is to educate members on how to do things legally. State your points in a factual manner. If the intent strays from this objective, please report the post and we'll investigate.

==============================
internet_explorer, Welcome!

Yes, the paperwork can be painful. However, it must be done correctly.

The wiki may have some helpful information: Non-US investor's guide to navigating US tax traps

What is your home country? Perhaps we can find something that you may have overlooked.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Topic Author
internet_explorer
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Re: Clearing out highly taxable accounts

Post by internet_explorer »

yog wrote: Mon Jun 27, 2022 11:38 am
internet_explorer wrote: Mon Jun 27, 2022 11:21 am
123 wrote: Mon Jun 27, 2022 10:52 am As with any trading activity you have no guarantee that the actual direction of the market will move in accordance with your expectations. If you have unlimited time perhaps you might be willing to wait it out. But while you are waiting you likely have exchange rate variations to toss into the mix.

Yep. Finding the right trade is key, if it is legal. Ideally something which can move up or down ~50% in a matter of days.
Which, if it goes in the wrong direction, the trade can be tried again.
The trade you describe is not legal, and resulted in one hedge fund paying a large settlement.

There is a much more complex trade currently being exploited which has not yet passed scrutiny.

Search: susquehanna propublica
10/10 answer.
Topic Author
internet_explorer
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Re: Clearing out highly taxable accounts

Post by internet_explorer »

LadyGeek wrote: Mon Jun 27, 2022 11:54 am For the record, discussions of dishonest behavior or bypassing the law are totally unacceptable.

The approach is to educate members on how to do things legally. State your points in a factual manner. If the intent strays from this objective, please report the post and we'll investigate.

==============================
internet_explorer, Welcome!

Yes, the paperwork can be painful. However, it must be done correctly.

The wiki may have some helpful information: Non-US investor's guide to navigating US tax traps

What is your home country? Perhaps we can find something that you may have overlooked.
Yeah, I don't really want to be doing IRS paperwork till I'm 60 :P

Thanks for the warm welcome, my current residence is Singapore.
I've looked through most of the NRA wiki and have pages of notes from there. It's been excellent.
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Re: Clearing out highly taxable accounts [Singapore]

Post by LadyGeek »

^^^ Thanks! I have added your home country to the thread title, which will attract our members who can help you the best.

If you want to change the thread title further, just edit the Subject: line in Post #1.

Bear in mind that you may need to consult with someone experienced with cross-border taxation.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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Re: Clearing out highly taxable accounts

Post by TedSwippet »

yog wrote: Mon Jun 27, 2022 11:38 am
internet_explorer wrote: Mon Jun 27, 2022 11:21 am
123 wrote: Mon Jun 27, 2022 10:52 am As with any trading activity you have no guarantee that the actual direction of the market will move in accordance with your expectations. If you have unlimited time perhaps you might be willing to wait it out. But while you are waiting you likely have exchange rate variations to toss into the mix.
Yep. Finding the right trade is key, if it is legal. Ideally something which can move up or down ~50% in a matter of days.
Which, if it goes in the wrong direction, the trade can be tried again.
The trade you describe is not legal, and resulted in one hedge fund paying a large settlement.
Perhaps not legal in the US, not least because the US both taxes investment income and has a heavy regulatory touch.

But can you be as certain though about its illegality in other countries? US nonresident aliens do not have to live under the full panoply of US tax laws. Susquehanna's Jeff Yass is a US citizen, a US resident, and a hedge fund manager. The topic author is none of these things. For clarity, I'm not claiming that the actions suggested by the topic author are necessarily legal. I am however saying that an unequivocal claim of them not being legal is questionable, and I don't immediately see any particular illegality in what's being proposed.

It is nevertheless certainly true that this is by no means guaranteed to work. It could well backfire, leaving the topic author with more, not less, in their US accounts.
Last edited by TedSwippet on Mon Jun 27, 2022 5:19 pm, edited 1 time in total.
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Re: Clearing out highly taxable accounts

Post by TedSwippet »

internet_explorer wrote: Mon Jun 27, 2022 12:07 pm Yeah, I don't really want to be doing IRS paperwork till I'm 60
If your only remaining connection to the US is a few lingering (hostage!) US retirement accounts, such as IRAs or 401ks, and if you are not yet taking withdrawals from them (presumed from "till I'm 60"), I don't see a need for you to file IRS paperwork beyond perhaps a simple W-8BEN refresh every three years or so, confirming you're not a "US person". Certainly no need to file any form of US tax return annually.

You might need to file something when you do start taking withdrawals, although even then that's not always a given. For example, if you move to a country with a US tax treaty that reserves taxing rights to the country of residence only, then -- providing your IRA or 401k provider applies the correct 0% US withholding rate; and not all do -- no US tax return required. An added bonus of such a tax treaty is that it potentially nullifies the IRS's early withdrawal penalties for IRAs and 401ks.

Unfortunately, Singapore has no US tax treaties. However, even in the worst case of having to file a 1040-NR on withdrawals, because that covers only your US source income, which will be just IRA or 401k withdrawals, the process is whole orders of magnitude simpler than any US resident 1040 you might have been used to.

Your main problem is probably not IRS paperwork, nor the overhang of US income tax on eventual withdrawals. Rather, it is the potential for an iniquitous US estate tax of some 26-40% of your funds, should you be foolish enough to die with a balance above just $60k in aggregate in these accounts. Probably more than anything else, that can argue for reducing or eliminating these accounts; potentially even with swallowing a 10% early withdrawal penalty.
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Re: Clearing out highly taxable accounts

Post by internet_explorer »

TedSwippet wrote: Mon Jun 27, 2022 1:47 pm

It is nevertheless certainly true that this is by no means guaranteed to work. It could well backfire, leaving the topic author with more, not less, in their US accounts.
Yea, I should have added that it's a non-guaranteed bet that the smaller account will get wiped out due to gambler's ruin.
TedSwippet wrote: Mon Jun 27, 2022 2:19 pm However, even in the worst case of having to file a 1040-NR on withdrawals, because that covers only your US source income, which will be just IRA or 401k withdrawals, the process is whole orders of magnitude simpler than any US resident 1040 you might have been used to.

Your main problem is probably not IRS paperwork, nor the overhang of US income tax on eventual withdrawals. Rather, it is the potential for an iniquitous US estate tax of some 26-40% of your funds, should you be foolish enough to die with a balance above just $60k in aggregate in these accounts. Probably more than anything else, that can argue for reducing or eliminating these accounts; potentially even with swallowing a 10% early withdrawal penalty.
That is actually good to know, it's actually one of the broader goals to eliminate estate tax risk, but I thought it's just easier to clean everything out and be done with it.

I suppose that it can't be illegal to simply hold insurance style assets (negative expected return) in these accounts. If a big enough crisis hits, there is a history penalty-free withdrawal allowances. Oh, and remain alive till then :wink:
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Re: Clearing out highly taxable accounts [Singapore]

Post by gougou »

If you believe one side of the trade will make you money while the other side will lose you money, you’d put both accounts on the side that will make you money.

What if your IRA makes a lot of money while your offshore account loses a lot? You now have a bigger problem.

I thought Roth IRA withdrawals are not taxable. For tax-deferred IRA, you have to pay taxes eventually, might as well just pay it now.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Re: Clearing out highly taxable accounts

Post by yog »

TedSwippet wrote: Mon Jun 27, 2022 1:47 pm
yog wrote: Mon Jun 27, 2022 11:38 am
internet_explorer wrote: Mon Jun 27, 2022 11:21 am
123 wrote: Mon Jun 27, 2022 10:52 am As with any trading activity you have no guarantee that the actual direction of the market will move in accordance with your expectations. If you have unlimited time perhaps you might be willing to wait it out. But while you are waiting you likely have exchange rate variations to toss into the mix.
Yep. Finding the right trade is key, if it is legal. Ideally something which can move up or down ~50% in a matter of days.
Which, if it goes in the wrong direction, the trade can be tried again.
The trade you describe is not legal, and resulted in one hedge fund paying a large settlement.
Perhaps not legal in the US, not least because the US both taxes investment income and has a heavy regulatory touch.

But can you be as certain though about its illegality in other countries? US nonresident aliens do not have to live under the full panoply of US tax laws. Susquehanna's Jeff Yass is a US citizen, a US resident, and a hedge fund manager. The topic author is none of these things. For clarity, I'm not claiming that the actions suggested by the topic author are necessarily legal. I am however saying that an unequivocal claim of them not being legal is questionable, and I don't immediately see any particular illegality in what's being proposed.

It is nevertheless certainly true that this is by no means guaranteed to work. It could well backfire, leaving the topic author with more, not less, in their US accounts.
The sticky wicket is scam transactions are certain to be legally equivocal while being unequivocally illegal.

A taxpayer's status is not really important. This transaction fits the classical definition of an economic scam of substance - a series of executed transactions with no business or profit-generating motive beyond obtaining tax benefits.

Scam transactions get voided, and this is why there are messy settlements.
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Re: Clearing out highly taxable accounts [Singapore]

Post by TedSwippet »

gougou wrote: Mon Jun 27, 2022 11:43 pm For tax-deferred IRA, you have to pay taxes eventually, might as well just pay it now.
Not if paying later means paying less. At the moment, the topic author would face a 10% early withdrawal penalty on top of the tax. Wait until age 59.5 and that 10% penalty disappears.
yog wrote: Tue Jun 28, 2022 2:15 am A taxpayer's status is not really important. This transaction fits the classical definition of an economic scam of substance - a series of executed transactions with no business or profit-generating motive beyond obtaining tax benefits.
Perhaps. I'd say the risk of that happening in this case is minimal enough to not really make it a worry. Just my opinion, though.

A larger problem may well be gaining access in a 401k or IRA to the type of instrument necessary to accomplish this. In my own case, nonresident alien in a tax treaty country holding Vanguard IRAs and a 401k, Vanguard will not let me have a brokerage account or access to anything other than mutual funds, Interactive Brokers won't let me have an account, neither will Fidelity, and so on. Even if inclined (and I'm not), this makes it fundamentally impossible for me to indulge in short selling of anything in my accounts.
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internet_explorer
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Re: Clearing out highly taxable accounts [Singapore]

Post by internet_explorer »

TedSwippet wrote: Tue Jun 28, 2022 3:37 am
A larger problem may well be gaining access in a 401k or IRA to the type of instrument necessary to accomplish this. In my own case, nonresident alien in a tax treaty country holding Vanguard IRAs and a 401k, Vanguard will not let me have a brokerage account or access to anything other than mutual funds, Interactive Brokers won't let me have an account, neither will Fidelity, and so on. Even if inclined (and I'm not), this makes it fundamentally impossible for me to indulge in short selling of anything in my accounts.
You could move to fidelity, they even allow crypto in retirement accounts :? . Or are you saying that none of these brokers will let you even transfer your IRA over?
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Re: Clearing out highly taxable accounts [Singapore]

Post by TedSwippet »

internet_explorer wrote: Tue Jun 28, 2022 6:28 am You could move to fidelity, they even allow crypto in retirement accounts. Or are you saying that none of these brokers will let you even transfer your IRA over?
Yup, that's what I'm saying. I've checked with both. Neither appeared willing to let me open and transfer IRA accounts. In practice, it seems like as a nonresident alien, not only are your retirement accounts held hostage in the US, but they are also effectively held hostage in whatever provider you happened to be with, and then subject to the whim of that provider when it comes to flexibility around things like available investments.

That leaves the deep existential fear that a provider might at some time decide that cost of the US's hefty regulatory overhead for running nonresident alien accounts is simply too high, and so decide to evict these clients. With nowhere else to go, that would generate an unwanted, instant, and likely pretty extreme tax bill. Potentially retirement-destroying. Charming.
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Re: Clearing out highly taxable accounts [Singapore]

Post by gougou »

TedSwippet wrote: Tue Jun 28, 2022 3:37 am
gougou wrote: Mon Jun 27, 2022 11:43 pm For tax-deferred IRA, you have to pay taxes eventually, might as well just pay it now.
Not if paying later means paying less. At the moment, the topic author would face a 10% early withdrawal penalty on top of the tax. Wait until age 59.5 and that 10% penalty disappears.
So exactly how much tax is due for regular IRA/401k? I thought you just pay a 30% withholding tax and you are done?

For Roth IRA is there even a withholding tax?
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Re: Clearing out highly taxable accounts [Singapore]

Post by TedSwippet »

gougou wrote: Tue Jun 28, 2022 10:26 am
TedSwippet wrote: Tue Jun 28, 2022 3:37 am
gougou wrote: Mon Jun 27, 2022 11:43 pm For tax-deferred IRA, you have to pay taxes eventually, might as well just pay it now.
Not if paying later means paying less. At the moment, the topic author would face a 10% early withdrawal penalty on top of the tax. Wait until age 59.5 and that 10% penalty disappears.
So exactly how much tax is due for regular IRA/401k? I thought you just pay a 30% withholding tax and you are done?
Nothing so simple. As I understand it, and without a treaty that modifies things, the US tax for an NRA making IRA withdrawals is made up of two components. One is graduated (ECI) tax on the contributions element (and probably, though not definitely, less than 30%); the other is the flat and US standard 30% (FDAP) tax on the growth on those contributions.

Separate to this is an additional flat 10% penalty tax on any IRA withdrawals made before age 59.5. The US applies this to everybody, nonresident alien or US citizen. There are some limited exceptions to it (for example, becoming totally disabled), but being a nonresident alien is not one of them.

However, if you do happen to live in a country with a US tax treaty that reserves tax on pensions to country of residence only, then that treaty overrides the first of these, and probably also the second (although analyses can vary on this). That can make life much less complicated.
gougou wrote: Tue Jun 28, 2022 10:26 am For Roth IRA is there even a withholding tax?
There shouldn't be, in particular if you are over age 59.5 and your provider is handling things correctly. (Although, some providers these days seem so scared of the IRS, or incapable of understanding what the IRS passes off as "guidance", or both, to the point where they incorrectly withhold tax anyway, and leave it up to the individual taxpayer to square it all away with the IRS.)

If under age 59.5 though, and if not covered by a suitable tax treaty, the 10% early withdrawal penalty applies at least partially, and sometimes fully, to Roths (otherwise, you could entirely avoid it with a pre-tax account by simply doing a Roth conversion followed by immediate Roth withdrawal). There are some fiddly rules around differing treatments for contributions, conversions, earnings, five-year wait periods, and so on.

The tl;dr is, as ever, US retirement accounts are often a tax nightmare for nonresident aliens.
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Re: Clearing out highly taxable accounts [Singapore]

Post by internet_explorer »

TedSwippet wrote: Tue Jun 28, 2022 11:57 am
Nothing so simple. As I understand it, and without a treaty that modifies things, the US tax for an NRA making IRA withdrawals is made up of two components. One is graduated (ECI) tax on the contributions element (and probably, though not definitely, less than 30%); the other is the flat and US standard 30% (FDAP) tax on the growth on those contributions.

Separate to this is an additional flat 10% penalty tax on any IRA withdrawals made before age 59.5. The US applies this to everybody, nonresident alien or US citizen. There are some limited exceptions to it (for example, becoming totally disabled), but being a nonresident alien is not one of them.
For the contributions, I took it to be the federal tax rate (10% <$9,950, 12% <$40,525...). Which is still relatively low pain if you withdraw <$40,525 a year, for a total tax hit of ~22%.

Or am I missing something?
As always, the US tax system is beyond complicated, and it's really unfortunate that you're being treated that way as a NRA.
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Re: Clearing out highly taxable accounts [Singapore]

Post by Hyperborea »

internet_explorer wrote: Tue Jun 28, 2022 10:50 pm For the contributions, I took it to be the federal tax rate (10% <$9,950, 12% <$40,525...). Which is still relatively low pain if you withdraw <$40,525 a year, for a total tax hit of ~22%.

Or am I missing something?
As always, the US tax system is beyond complicated, and it's really unfortunate that you're being treated that way as a NRA.
If that is the correct tax brackets to use then it would be:

US$9,950 @ 10% = US$995
(US$40,525 - US$9,950) @ 12% = US$30,575 @ 12% = US$3669

For a total tax of US$4,664

The brackets aren't additive.


However, if the OP's IRA is big then this could take a long time to drain. During that time they may die and their spouse or other heirs will lose a large amount to US estate taxes.

If that is the case (large IRA) the OP might want to consider becoming a tax resident of somewhere with a treaty and good tax rates and then emptying the IRA there. Maybe somewhere nearby to Singapore like Thailand which has a 0% rate for retirement accounts in the US tax treaty. Thailand will also not tax money earned overseas and not brought into Thailand. Take a year of retirement in Thailand and pay for it with the tax savings.
It’s not just that facts don’t seem to matter anymore. It’s that it doesn’t seem to matter that facts don’t matter.
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Re: Clearing out highly taxable accounts [Singapore]

Post by TedSwippet »

internet_explorer wrote: Tue Jun 28, 2022 10:50 pm Or am I missing something?
As always, the US tax system is beyond complicated, and it's really unfortunate that you're being treated that way as a NRA.
I don't think you're missing anything. Although, the non-treaty tax I outlined, graduated ECI for the contributions and 30% FDAP flat rate for the gains, isn't something I've researched in detail, since I live in a treaty country.

Up to now I hadn't found a good write-up elsewhere of this, instead piecing it together from scant and inadequate fragments distributed randomly throughout IRS instructions and publications. However, with a bit more deep googling I found this (I should have known to look here first; Phil Hodgen is always reliable in this area!):

IRA Distributions for Noncovered Expatriates - Hodgen.com

Not just complicated then, but also wildly inequitable. Withdraw as a US resident and you pay graduated ECI rate (plus perhaps 10% early withdrawal penalty) on the entire balance. Withdraw as a nonresident alien with no treaty and you get to pay some ECI rate, but also some FDAP 30% rate (again perhaps with 10% early withdrawal penalty); this is very likely indeed to be a larger amount of tax than a US resident would face. Perhaps much larger.

And don't even get me started on the execrable exit tax, for former citizens and long-term green card holders. (Seriously, don't!)
Hyperborea wrote: Wed Jun 29, 2022 1:39 am For a total tax of US$4,664 ... The brackets aren't additive.
Not the topic author, but I think their calculation of "approximately 22%" includes the 10% early withdrawal penalty. That is 10% of the first $10k or so, 12% of the remainder, plus 10% of everything. That would take the calculation to $8717, so an effective 21.5%. (Aside: this uses 2021 tax brackets; 2022's are slightly higher.)

How painful this rate is depends on the tax rate that would have been paid if these contributions had been taken as salary instead. Also, on whether there is a component of employer match in here; a good employer match can argue for 401k contributions even if there will be a high tax plus penalties on withdrawal. Overall, 22% or so might not be too bad, where the comparison is to tax avoided by contributing.

Unfortunately that 22% only applies to the contributions part of a withdrawal. What would definitely be painful is the 40% that results from adding a 10% penalty to the 30% FDAP rate on the growth element of a withdrawal. Assuming things work this way, that is. I've turned up nothing to suggest that they do not.
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Re: Clearing out highly taxable accounts [Singapore]

Post by internet_explorer »

TedSwippet wrote: Wed Jun 29, 2022 3:00 am
Up to now I hadn't found a good write-up elsewhere of this, instead piecing it together from scant and inadequate fragments distributed randomly throughout IRS instructions and publications. However, with a bit more deep googling I found this (I should have known to look here first; Phil Hodgen is always reliable in this area!):

IRA Distributions for Noncovered Expatriates - Hodgen.com

Not just complicated then, but also wildly inequitable. Withdraw as a US resident and you pay graduated ECI rate (plus perhaps 10% early withdrawal penalty) on the entire balance. Withdraw as a nonresident alien with no treaty and you get to pay some ECI rate, but also some FDAP 30% rate (again perhaps with 10% early withdrawal penalty); this is very likely indeed to be a larger amount of tax than a US resident would face. Perhaps much larger.

And don't even get me started on the execrable exit tax, for former citizens and long-term green card holders. (Seriously, don't!)
I've spent hours googling this issue and Hodgen didn't turn up. Good stuff.
If one takes a long enough view, capital controls often get much worse during times of debt crises / capital flight. I'd like to avoid that.

There seems to be a way to get around expatriation tax

TedSwippet wrote: Wed Jun 29, 2022 3:00 am
Not the topic author, but I think their calculation of "approximately 22%" includes the 10% early withdrawal penalty. That is 10% of the first $10k or so, 12% of the remainder, plus 10% of everything. That would take the calculation to $8717, so an effective 21.5%. (Aside: this uses 2021 tax brackets; 2022's are slightly higher.)
yep.
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Re: Clearing out highly taxable accounts [Singapore]

Post by TedSwippet »

internet_explorer wrote: Thu Jun 30, 2022 2:43 am There seems to be a way to get around expatriation tax
Just to be clear, Eduardo Saverin didn't get around the exit tax. Rather, he expatriated before an event that he judged (correctly) would hugely inflate his unrealised capital gains. By expatriating early, he still had to pay, and did pay, the US's abominable exit tax in full. He just paid it on a much smaller amount than if he had waited.

No longer being a US citizen then hugely reduced his future taxes on income and gains from that point forwards. This final aspect of things was his actual tax saving.
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Re: Clearing out highly taxable accounts [Singapore]

Post by internet_explorer »

TedSwippet wrote: Thu Jun 30, 2022 3:09 am
internet_explorer wrote: Thu Jun 30, 2022 2:43 am There seems to be a way to get around expatriation tax
Just to be clear, Eduardo Saverin didn't get around the exit tax. Rather, he expatriated before an event that he judged (correctly) would hugely inflate his unrealised capital gains. By expatriating early, he still had to pay, and did pay, the US's abominable exit tax in full. He just paid it on a much smaller amount than if he had waited.

No longer being a US citizen then hugely reduced his future taxes on income and gains from that point forwards. This final aspect of things was his actual tax saving.
then that's pretty indicative that there's no good way to substantially improve things
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Re: Clearing out highly taxable accounts [Singapore]

Post by internet_explorer »

To help anyone coming across this at a later date, one might want to withdraw your IRA / 401k early and pay the penalty because:
- you might not get a say if the US or your provider decides to mess with your account.
- if your time horizon for a retirement account is at 20+ years...
- companies like fidelity may substantially switch their biz models,
- or governments may change their policies and it can affect your account
- estate planning gets complicated above ~$50K
- investment profits are highly taxed

Betting on your account value going down, then taking non-US insurance against those bets is likely illegal.

Simply withdrawing and paying the penalty can be reduced by doing this over time. For example, the 12% tax bracket currently applies to the <$40k, so withdrawing that amount every year would probably be somewhat tax efficient, although you have to pay a higher tax rate on profits.

There are other options discussed, such as moving to a tax treaty country for a year, like Thailand. I don't have details but maybe someone with more experience would like the share.
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Re: Clearing out highly taxable accounts [Singapore]

Post by TedSwippet »

internet_explorer wrote: Sat Jul 02, 2022 5:22 am To help anyone coming across this at a later date, one might want to withdraw your IRA / 401k early and pay the penalty because:
- you might not get a say if the US or your provider decides to mess with your account.
- - if your time horizon for a retirement account is at 20+ years...
- - - companies like fidelity may substantially switch their biz models,
- - - or governments may change their policies and it can affect your account
- estate planning gets complicated above ~$50K
- investment profits are highly taxed
Pretty much. Not exactly an encouraging picture, is it? I'll just add a couple of points.

Firstly, if you live in a country with a US tax treaty, and in particular with a US estate tax treaty, then some areas of this are less uncomfortable. For example, most (though not all) estate tax treaties raise the exemption from a miserly $60k to the same level as allowed to US citizens, currently around $11mm (but this of course could change, either upward or downward). And some income tax treaties reserve tax to the country of residence only, which eliminates any US income tax issues.

And secondly, depending on where you plan to live in future, it is worth seriously considering whether it will be worthwhile saving into an IRA or 401k plan at all. Probably sensible to capture the full employer match, depending perhaps on the percentage offered, but may require serious thought before committing beyond that.
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Re: Clearing out US retirement accounts

Post by JoeRetire »

internet_explorer wrote: Mon Jun 27, 2022 8:11 amHowever, it should be possible to transfer that wealth into your local jurisdiction while paying little in tax.
It should? Why?
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Re: Clearing out US retirement accounts

Post by KlangFool »

internet_explorer wrote: Mon Jun 27, 2022 8:11 am
For example, if you had a retirement account in US like IRA, but have left the US. Withdrawal and tax penalties are significant.
internet_explorer,

I would start by checking whether this assumption is true. It is most likely false. You may want to provide some numbers as to why it is true. A person does not have to withdraw the whole amount from the retirement account at one lump sum. It can be done across many years.

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Re: Clearing out highly taxable accounts [Singapore]

Post by KlangFool »

internet_explorer wrote: Sat Jul 02, 2022 5:22 am
For example, the 12% tax bracket currently applies to the <$40k,
For a single person, the standard deduction is $12,950. So, the amount is less than 40K+$12,950 = 53K.

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Re: Clearing out highly taxable accounts [Singapore]

Post by TedSwippet »

KlangFool wrote: Sat Jul 02, 2022 11:57 am
internet_explorer wrote: Sat Jul 02, 2022 5:22 am For example, the 12% tax bracket currently applies to the <$40k,
For a single person, the standard deduction is $12,950. So, the amount is less than 40K+$12,950 = 53K.
Unfortunately not. From IRS, Nonresident Alien Figuring Your Tax:
Standard Deduction
If you are a nonresident alien, you cannot claim the standard deduction. ...
...
Exemptions
For tax years beginning after December 31, 2017, nonresident aliens cannot claim a personal exemption deduction for themselves, their spouses, or their dependents.
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Re: Clearing out US retirement accounts

Post by TedSwippet »

KlangFool wrote: Sat Jul 02, 2022 11:54 am
internet_explorer wrote: Mon Jun 27, 2022 8:11 am For example, if you had a retirement account in US like IRA, but have left the US. Withdrawal and tax penalties are significant.
I would start by checking whether this assumption is true. It is most likely false. You may want to provide some numbers as to why it is true. A person does not have to withdraw the whole amount from the retirement account at one lump sum. It can be done across many years.
There are estimated numbers upthread. The problem is that the longer the IRA is held, the larger the gain component in comparison with contributions, with the result that US tax asymptotically approaches 30% (or 40% with an early withdrawal penalty). In addition, there is an increasing risk of US estate tax for holding above $60k, both from investment growth and from increased risk of death as you age. Additionally, the topic author lives in a country that does not tax investment income.

Taken together, these factors all argue strongly for taking earlier withdrawals from the IRA, and investing the money locally to capture future gains entirely free of US tax interference. 100% of future gains on 88% (or 78%, with early withdrawal penalty) of an IRA is better than 70% (60%, with early withdrawal penalty) of future gains on 100% of an IRA.
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Re: Clearing out US retirement accounts

Post by internet_explorer »

TedSwippet wrote: Sat Jul 02, 2022 11:32 am
And secondly, depending on where you plan to live in future, it is worth seriously considering whether it will be worthwhile saving into an IRA or 401k plan at all. Probably sensible to capture the full employer match, depending perhaps on the percentage offered, but may require serious thought before committing beyond that.
Ultimately, it's still a lower tax impact than not doing it. There was frustratingly little info out there a few years ago, but I took the gamble since there was an employer match.

It can also be improved somewhat by tax-loss harvesting strategies. I'm not sure where the line between legal and illegal is, but selling losers (in this case, in the 401k), and buying them back elsewhere is done by basically everyone who has invested in a roboadvisor.
TedSwippet wrote: Sat Jul 02, 2022 1:49 pm
Taken together, these factors all argue strongly for taking earlier withdrawals from the IRA, and investing the money locally to capture future gains entirely free of US tax interference. 100% of future gains on 88% (or 78%, with early withdrawal penalty) of an IRA is better than 70% (60%, with early withdrawal penalty) of future gains on 100% of an IRA.
Thanks for clarifying. Perhaps I should edit the first post so people don't miss the summary.
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Re: Clearing out US retirement accounts

Post by Watty »

Two more things to add to your list of complications.

1) Be sure to also consider state taxes. Giving up tax residency in a state can be more complicated than you might expect and if you still have a US address associated with your retirement account that may give that state a valid claim that it is taxable in that state.

2) In addition the nonresident alien estate taxes you need to consider that whoever inherits the retirement could be facing high taxes when they withdraw the money. That could be on top of the high estate taxes.

It really sounds like you need professional advice.
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Re: Clearing out highly taxable accounts [Singapore]

Post by gougou »

internet_explorer wrote: Sat Jul 02, 2022 5:22 am
Simply withdrawing and paying the penalty can be reduced by doing this over time. For example, the 12% tax bracket currently applies to the <$40k, so withdrawing that amount every year would probably be somewhat tax efficient, although you have to pay a higher tax rate on profits.
$40k/yr probably would take forever and I would need to file US taxes every year. I would just withdraw everything in one go and pay 30% withholding tax and not even file a US tax return. I don’t think the US has jurisdiction over non-resident aliens to compel them to file US taxes. So the withholding tax is all you need to pay if you choose not to file a US tax return.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Re: Clearing out US retirement accounts

Post by Vogatrice »

I have a real-life example of this. I am in the process of clearing out my trad IRA now that I am a non-resident alien. So far, it’s working fine. I just need to stay alive another ten years and it will be a perfect strategy :D

Details:
  • started Trad IRA with my first post-college job
  • Faithfully contributed the whopping maximum of $2000/year until I moved to Canada ten years later
  • Never contributed another dime after that, contributed to Canadian RRSP instead
  • Retired at 59, finally renounced U.S. citizenship, moved to Italy which has a good tax treaty with U.S.
  • Chose to live in a region eligible for 10 years of 7% flat tax (immigration incentive to lure retirees to underpopulated regions of Italy)
  • started withdrawals (at age 61) of 10% of the account value annually (withdrawals must be “systematic” instead of “lump sum” to avoid U.S. taxation)
  • U.S. does not tax IRA withdrawals paid to Italian residents, Italy taxes them at the 7% (for the duration of the tax benefit)
  • Bingo. Geo arbitrage lowered worldwide taxation to a reasonable rate, no U.S. taxation, no withdrawal penalty. And La Dolce Vita to boot. The account will be emptied before the tax benefit expires. I am reinvesting the withdrawals in a similar Ireland-based Vanguard all-in-one ETF
And two extra-credit bonuses:
  • investing like a Boglehead for 40 years turned a very modest IRA account into over $700K
  • through a bit of clumsy dumb luck and a poor CAD/USD exchange rate, I managed to squeak in my expatriation just before I crossed the exit tax threshold so I escaped unscathed from that travesty
I don’t know the OP’s age, but my reaction to his initial post was “why would you trash your retirement savings with weird high-risk investments” and “just wait it out, let the IRA grow, and then deal with it after 59.5. Stay healthy in the meantime.” (Not always a low-risk strategy either) But if he(?) is still quite young, and the account is not huge, maybe it’s not wrong to deal with it earlier than I did.
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Re: Clearing out highly taxable accounts [Singapore]

Post by TedSwippet »

gougou wrote: Sun Jul 03, 2022 12:22 am I would just withdraw everything in one go and pay 30% withholding tax and not even file a US tax return. I don’t think the US has jurisdiction over non-resident aliens to compel them to file US taxes. So the withholding tax is all you need to pay if you choose not to file a US tax return.
This doesn't seem remotely sensible to me. It is almost certainly an overpayment of US tax, and potentially a very large one. US tax on the contribution element is at graduated rates, meaning that the total tax will net out at below 30% (or 40%, with early withdrawal penalty) unless contributions exceeded about $500k; highly unlikely. Either that, or it's tax evasion of the 10% early withdrawal penalty where not withheld by the provider.
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Re: Clearing out US retirement accounts

Post by internet_explorer »

Vogatrice wrote: Sun Jul 03, 2022 2:39 am I have a real-life example of this. I am in the process of clearing out my trad IRA now that I am a non-resident alien. So far, it’s working fine. I just need to stay alive another ten years and it will be a perfect strategy :D

Details:
  • started Trad IRA with my first post-college job
  • Faithfully contributed the whopping maximum of $2000/year until I moved to Canada ten years later
  • Never contributed another dime after that, contributed to Canadian RRSP instead
  • Retired at 59, finally renounced U.S. citizenship, moved to Italy which has a good tax treaty with U.S.
  • Chose to live in a region eligible for 10 years of 7% flat tax (immigration incentive to lure retirees to underpopulated regions of Italy)
  • started withdrawals (at age 61) of 10% of the account value annually (withdrawals must be “systematic” instead of “lump sum” to avoid U.S. taxation)
  • U.S. does not tax IRA withdrawals paid to Italian residents, Italy taxes them at the 7% (for the duration of the tax benefit)
  • Bingo. Geo arbitrage lowered worldwide taxation to a reasonable rate, no U.S. taxation, no withdrawal penalty. And La Dolce Vita to boot. The account will be emptied before the tax benefit expires. I am reinvesting the withdrawals in a similar Ireland-based Vanguard all-in-one ETF
And two extra-credit bonuses:
  • investing like a Boglehead for 40 years turned a very modest IRA account into over $700K
  • through a bit of clumsy dumb luck and a poor CAD/USD exchange rate, I managed to squeak in my expatriation just before I crossed the exit tax threshold so I escaped unscathed from that travesty
I don’t know the OP’s age, but my reaction to his initial post was “why would you trash your retirement savings with weird high-risk investments” and “just wait it out, let the IRA grow, and then deal with it after 59.5. Stay healthy in the meantime.” (Not always a low-risk strategy either) But if he(?) is still quite young, and the account is not huge, maybe it’s not wrong to deal with it earlier than I did.

You have dodged many bullets (rather brilliantly!) and successfully won the game. Thank you for sharing and congrats! I don't have your tax treaty advantage for the foreseeable future, so while your strategy is a great one, and I'm sure it's worth aspiring to for others, it isn't for me.
Italy is beautiful and I'll be spending some time around the lakes later this year.

I'm still quite young, and most of my net worth is outside the IRA (so my overall portfolio is a mix of high risk and lower risk assets). My goals are to build a strategy that will work for the next 50 years, which also means reducing all kinds of tail risk, or consolidating assets in places where risk can be easily controlled. Realising that my investing career is going to be way longer than my working career has led me to focus on this first.

Personally, I also believe the next 50 years will be much more challenging than the last 50, for all kinds of reasons, but that means approaching long term projects with much more caution than usual. While the WSB crowd's answer to the future being all kinds of scary is YOLO, perhaps this could be thought of as the polar opposite response.
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Re: Clearing out highly taxable accounts [Singapore]

Post by gougou »

TedSwippet wrote: Sun Jul 03, 2022 3:37 am
gougou wrote: Sun Jul 03, 2022 12:22 am I would just withdraw everything in one go and pay 30% withholding tax and not even file a US tax return. I don’t think the US has jurisdiction over non-resident aliens to compel them to file US taxes. So the withholding tax is all you need to pay if you choose not to file a US tax return.
This doesn't seem remotely sensible to me. It is almost certainly an overpayment of US tax, and potentially a very large one. US tax on the contribution element is at graduated rates, meaning that the total tax will net out at below 30% (or 40%, with early withdrawal penalty) unless contributions exceeded about $500k; highly unlikely. Either that, or it's tax evasion of the 10% early withdrawal penalty where not withheld by the provider.
It’s not tax evasion if you pay the withholding tax. Most non resident investors in US stock market simply pay a withholding tax on dividends/distributions and never file US taxes.

If you are over 59.5 yo then yes you can withdraw a reasonable amount every year and still stay at the 24% income tax bracket. If you are under 59.5 and want to quickly say goodbye to IRS then the one-time 30% withholding tax is a very small price to pay since income tax rate plus penalty is at least 20% and quickly going to 34% at about $40k/yr and appreciation is always taxed at 40%. If OP had $1M in IRAs then a $40k withdrawal is just 4% which takes forever.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Re: Clearing out highly taxable accounts [Singapore]

Post by TedSwippet »

gougou wrote: Sun Jul 03, 2022 11:42 am It’s not tax evasion if you pay the withholding tax. Most non resident investors in US stock market simply pay a withholding tax on dividends/distributions and never file US taxes.
It is if your US tax liability would be higher than the amount withheld. Which it could be if you are younger than 59.5 and so owe the 10% early withdrawal penalty on top of a 30% FDAP flat tax rate withheld by the provider.

Most nonresident alien investors don't file US taxes because they don't have to, because the dividend withholding rates are set to make it unnecessary; that is, withholding exactly equals tax liability. Nonresident aliens holding IRAs are not "most" investors.

From form 1040-NR instructions (form 5329 is where the 10% penalty is applied):
You must file Form 1040-NR if any of the following conditions apply to you.
...
3. You owe any special taxes, including any of the following.
...
b. Additional tax on a qualified plan, including an individual retirement arrangement (IRA), or other tax-favored account. (If you are filing a return
only because you owe this tax, you can file Form 5329 by itself.)
Now, you can argue -- and in fact, have argued -- that the IRS cannot enforce compliance. Agreed. It would certainly be very difficult, if not realistically impossible, for them to do so for a nonresident alien with no remaining US situated assets. However, that doesn't change the facts, which are that if withholding is less than US tax liability, the US considers that you owe the excess. Not paying it may fit the legal definition of tax evasion, and it is certainly non-compliance, even if the IRS is powerless to do anything about it

Just to be clear, I'm not defending the US policy here. Taxing nonresident aliens at higher rates than residents is inequitable at minimum, and downright dishonest and sleazy in many cases. However, it is what the US does, and the main defence is to remain awake to these types of traps, and avoid them before they become problems. And where you do hit one, and it turns into a problem, and you choose to handle it by simply not complying with whatever (unfair, spiteful, treaty-breaking, draconian, hostile, bonkers -- choose your adjective to suit!) rule the US has chosen to put in place, let's at least be honest about calling that what it is.

All the above aside, it is nevertheless quite easy for 30% to be overwithholding, even where there is a 10% penalty. For example, age under 59.5 and withdrawing $60k from an IRA, composed of $40k contributions and $20k gains, generates a tax liability of 12% on $40k ECI, 30% on $20k FDAP, and 10% penalty, for a blended 28% tax rate. And the lower the gain element, the more that 30% is overwithholding. Hence the motivation to withdraw from the IRA sooner rather than later (well, that and the spectre of confiscatory US estate tax).
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Re: Clearing out highly taxable accounts [Singapore]

Post by internet_explorer »

TedSwippet wrote: Sun Jul 03, 2022 12:35 pm
Now, you can argue -- and in fact, have argued -- that the IRS cannot enforce compliance. Agreed. It would certainly be very difficult, if not realistically impossible, for them to do so for a nonresident alien with no remaining US situated assets. However, that doesn't change the facts, which are that if withholding is less than US tax liability, the US considers that you owe the excess. Not paying it may fit the legal definition of tax evasion, and it is certainly non-compliance, even if the IRS is powerless to do anything about it
I also stopped discussing implementation details of my initial idea because
LadyGeek wrote: Mon Jun 27, 2022 11:54 am For the record, discussions of dishonest behavior or bypassing the law are totally unacceptable.

The approach is to educate members on how to do things legally. State your points in a factual manner. If the intent strays from this objective, please report the post and we'll investigate.
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Re: Clearing out US retirement accounts

Post by internet_explorer »

FYI here is the fidelity faq for NRAs
https://www.fidelity.com/accounts/servi ... _faq.shtml
Q. I’ve recently moved outside the United States. What does that mean for me?

A. Regardless of where you move, the following applies:

Fidelity does not provide discretionary asset management services to customers who reside outside the United States.
The services provided by our representatives are limited to those that are ministerial or administrative in nature. Among other things, this means that our representatives do not engage in discussions with customers about such topics as asset allocation, income planning or portfolio composition.
Customers residing outside the United States will not be allowed to open new 529 Savings Plan Accounts ("529") or Health Savings Accounts ("HSA"), or to continue to contribute to existing 529 or HSA accounts.
As of August 1, 2014 customers residing outside the United States will not be allowed to purchase shares of mutual funds.

There are also additional restrictions that may apply, depending on the country where you now reside. Customers in certain countries may be limited to selling their existing holdings and withdrawing the proceeds from their accounts. They will not be able to make deposits in their accounts, or buy any additional securities. In most other countries, the restrictions will be less onerous, but customers may still experience certain limitations (for example, margin lending or options trading may not be permitted, or a certain type of account will experience trading restrictions).
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Re: Clearing out highly taxable accounts [Singapore]

Post by TedSwippet »

internet_explorer wrote: Mon Jul 04, 2022 12:48 am I also stopped discussing implementation details of my initial idea because
LadyGeek wrote: Mon Jun 27, 2022 11:54 am For the record, discussions of dishonest behavior or bypassing the law are totally unacceptable.

The approach is to educate members on how to do things legally. State your points in a factual manner. If the intent strays from this objective, please report the post and we'll investigate.
Understood. And for the record, I'm not arguing for nothing but full compliance. Everyone needs to make their own risk assessments. Given a sufficiently harsh, overtly xenophobic, and extraterritorial US tax law, carefully considered and safe non-compliance may well be an appropriate response for some individuals. We just need to be clear that this is what it is.

Finally, for the record, it seems that an IRA provider might apply the 10% penalty as part of withholding, for a potential 40% US tax withholding rate. Form 1099-R appears to be coded to allow that, though its instructions also state that the provider is not "required" to withhold the penalty, leaving the door open to them applying it at their discretion. They'll definitely know your age. Nothing similar for form 1042-S though, which is what NRAs get. Anyway, another potential unknown there, but one that could skew decisions if non-compliance is a consideration.
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Re: Clearing out highly taxable accounts [Singapore]

Post by internet_explorer »

TedSwippet wrote: Mon Jul 04, 2022 3:13 am
Understood. And for the record, I'm not arguing for nothing but full compliance. Everyone needs to make their own risk assessments. Given a sufficiently harsh, overtly xenophobic, and extraterritorial US tax law, carefully considered and safe non-compliance may well be an appropriate response for some individuals. We just need to be clear that this is what it is.

Finally, for the record, it seems that an IRA provider might apply the 10% penalty as part of withholding, for a potential 40% US tax withholding rate. Form 1099-R appears to be coded to allow that, though its instructions also state that the provider is not "required" to withhold the penalty, leaving the door open to them applying it at their discretion. They'll definitely know your age. Nothing similar for form 1042-S though, which is what NRAs get. Anyway, another potential unknown there, but one that could skew decisions if non-compliance is a consideration.
it seems like taking everything out at once is the option one would take when backed into a corner, and cannot find a tax treaty country to move to.
One could also be forced into that situation if your IRA provider does not want to work with you as a NRA (which seems very possible).

It's not a game to mess up if it's a big portion of your net worth, but there's so little good info about this. Surprising.
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