Inheriting a Vanguard IRA - US expat living & working in Germany

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Topic Author
MRinvestor
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Joined: Thu Sep 22, 2022 2:17 pm

Inheriting a Vanguard IRA - US expat living & working in Germany

Post by MRinvestor »

My mother-in-law died recently and designated her grandchildren to be the beneficiaries of her Vanguard IRA.

One of the grandchildren is my daughter, a US citizen, who lives in Germany and works for a German employer.

She has tried Vanguard's online application to inherit her portion of grandma's IRA. But where they ask for addresses you can only put in domestic US addresses, including where they ask about employment. We are stumped here.

Her German employer does have a NYC operation but she is an employee of the German parent company, not the entity in NYC, so she is reluctant to use the NYC address for the Vanguard application.

Compounding the problem is that all 4 grandhildren have to apply to Vanguard individually, and all 4 applications have to be accepted by Vanguard before Vanguard will effect the Inherited IRA transfers to any of the 4 grandchildren.

Can anyone suggest a path to follow with the application ... or a financial institution that can open an account for an expat and also enable an Inherited IRA transfer from Vanguard?
Last edited by MRinvestor on Thu Oct 06, 2022 7:36 pm, edited 3 times in total.
BoMe
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Re: Inheriting a Vanguard IRA - US expat living & working in Germany

Post by BoMe »

Facing a similar situation, would love any guidance!
helloyou
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Re: Inheriting a Vanguard IRA - US expat living & working in Germany

Post by helloyou »

Please do not take my comment as advice but I would say it's fine to put the US address, or no employer name at all. Why would it change anything if she based in the US or unemployed for example? Would they still ask for this information? If not it's maybe not asking for legal fiscal purposes but rather to see if the employer of the beneficiary has a Vanguard relationship to which they could transfer this IRA to. It's just an assumption as I am no expert on this but this would be my preliminary thought process.
Topic Author
MRinvestor
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Joined: Thu Sep 22, 2022 2:17 pm

Re: Inheriting a Vanguard IRA - US expat living & working in Germany

Post by MRinvestor »

Reply to helloyou -
It is (would be) a problem to put in the US employer address for two reasons: 1) she is an employee of the German parent company, not the US operation which is legally a separate business entity and 2) it could be considered fraud by her employer or under various US/EC/German financial compliance laws & regulations. There's no way for us laypeople to know if the employer address was required by Vanguard for its own purposes or if it was driven by compliance regulations, although I suspect it's the latter.
Last edited by MRinvestor on Thu Oct 06, 2022 7:38 pm, edited 5 times in total.
Topic Author
MRinvestor
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Joined: Thu Sep 22, 2022 2:17 pm

Re: Inheriting a Vanguard IRA - US expat living & working in Germany

Post by MRinvestor »

Reply to BoMe -
Not much progress so far. I contacted Interactive Brokers because they claim they deal with this sort of thing but while talking with one of their reps he told me that since my daughter resides in Germany she would have to work with their German office and they could not handle an IRA.

I'm meeting with my attorney tomorrow about this, after which one or both of us will have a conference call with Vanguard to see what can be done. Will report back once I have more info.
Last edited by MRinvestor on Thu Oct 06, 2022 7:42 pm, edited 1 time in total.
ronno2018
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Re: Inheriting a Vanguard IRA - US expat living & working in Germany

Post by ronno2018 »

Has she called Vanguard and talked to someone there? My daughter is very online and does not think to call actual people! Good luck! :sharebeer
Sprucebark
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Re: Inheriting a Vanguard IRA - US expat living & working in Germany

Post by Sprucebark »

Vanguard doesn’t like foreign addresses.

Can she use your address for the time being and then roll the IRA over to another provider later on?
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typical.investor
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Re: Inheriting a Vanguard IRA - US expat living & working in Germany

Post by typical.investor »

MRinvestor wrote: Thu Sep 22, 2022 2:47 pm Her German employer does have a NYC operation but she is an employee of the German parent company, not the entity in NYC, so she is reluctant to use the NYC address for the Vanguard application.
As you later stated, I would not use the employers address. I would file as either self employed or unemployed. I am not really sure if Vanguard will open an account for someone overseas. They froze my account when they realized that is where I was.
MRinvestor wrote: Thu Sep 22, 2022 2:47 pm Compounding the problem is that all 4 grandhildren have to apply to Vanguard individually, and all 4 applications have to be accepted by Vanguard before Vanguard will effect the Inherited IRA transfers to any of the 4 grandchildren.
That is an issue.
MRinvestor wrote: Thu Sep 22, 2022 2:47 pm Can anyone suggest a path to follow with the application ... or a financial institution that can open an account for an expat and also enable an Inherited IRA transfer from Vanguard?
I know that Schwab International can open accounts for expats in Germany. The issue though is they can not sell the investments that Americans need (traded on US exchanges) for tax reasons. That is due to EU regulations on the documentation needed for sales to EU investors.

At one point, I transferred in an inherited IRA to Schwab international, so know it is possible. And generally, once you owns a position, they will reinvest the dividends if you so choose. But whether that applies for accounts in the EU, who knows.

Worst case, I would file a complain with Finra if Vanguard refused to work with you. They can't legally sell an expat mutual funds, but that is their only limitation. Refusing to open an account for an expat is their choice as a company (probably to keep their costs low), so if they refuse to process the inheritance since one beneficiary is overseas, they Finra might have to get involved.
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typical.investor
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Re: Inheriting a Vanguard IRA - US expat living & working in Germany

Post by typical.investor »

Sprucebark wrote: Thu Oct 06, 2022 7:48 pm Vanguard doesn’t like foreign addresses.

Can she use your address for the time being and then roll the IRA over to another provider later on?
This is what I would do. And I would never tell Vanguard about being overseas.
Topic Author
MRinvestor
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Re: Inheriting a Vanguard IRA - US expat living & working in Germany

Post by MRinvestor »

Ok, so here's how things have turned out so far.

We called Vanguard and described the situation; they transferred us to their Advanced Specialists group, who responded in a very well prepared & helpful manner. They knew exactly how to handle this and were ready with the necessary forms and instructions.

Vanguard confirmed that an expat cannot do an online application. They provided 2 forms to us - a NonSpouse Inherited IRA Application and a Beneficiary Identification Form; and instructions on completing both. My daughter will fill them out and return them to Vanguard electronically as PDFs. Vanguard will then open an Inherited IRA for her and fund it with an in-kind transfer of her portion of grandmother's IRA. (Well, to be specific, the funding will occur after all 4 beneficiaries have filed their applications with Vanguard.)

There are some restrictions but they are not too onerous: She will not be able to have an online account while she resides outside the US. She will have to phone Vanguard if she wants to withdraw anything from the account. Withdrawals will be by check only. She may have to file a W9 with Vanguard.
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