Skip to comments.Six Financial Mistakes People Make When Retiring Abroad: Do not run afoul of IRS rules
Posted on 12/18/2015 7:08:35 AM PST by SeekAndFind
Retiring abroad may sound idyllic. But those who fall short on financial planning can pay a big price.
For the 380,000 retirees who live abroad, according to the Social Security Administrationâup from 307,000 in 2008âthe potential missteps are numerous. Amid a U.S. crackdown on money laundering, tax evasion and non-compliance with tax-reporting obligations, some expats are being cut off by their banks and brokerage firms. Others are running afoul of the Internal Revenue Service. Many are discovering that tax treaties don't always fully protect them from double taxation.
"People rarely understand the complexity of cross-border moves," says Jonathan Lachowitz, founder of White Lighthouse Investment Management of Lexington, Mass., and Lausanne, Switzerland. "You have to give planning a lot of time."
What follows are six common financial mistakes people make when retiring abroad, and how to avoid them.
1. Closing U.S. accounts
To pay rent and utility bills, you'll need to open a bank account in the country you are relocating to. But don't close your U.S. accounts.
Experts say expats generally should keep the bulk of their wealth in the U.S. That way, they can continue to take advantage of U.S. retirement accounts, such as traditional and Roth 401(k) and individual retirement accounts.
"Most foreign institutions cannot hold 401(k)s and IRAs and these accounts don't often have equivalents in other countries that the IRS gives tax-preferred status to,â says Mr. Lachowitz.
By keeping most of your money in the U.S., you will also minimize the foreign assets you must report annually to the IRSâan obligation that can trigger stiff penalties if you miss filing deadlines or underreport assets.
It is easy to make periodic transfers from U.S. retirement and bank accounts to a foreign bank account. Expats who use U.S. brokerage firms and banks also potentially save on fees
(Excerpt) Read more at wsj.com ...
It can be a mistake to move into the wrong STATE when you retire.
It is entirely possible to have to be filing returns in several different states upon retirement. And you won’t always know until you get hit with some huge judgment down the line a while.
Sometimes you just can’t go home again.
Considering the government is on the verge of stealing every single 401K, keeping your 401K in the US after moving to another country seems the height of foolishness.
Thanks for the info. I was thinking of moving to the Philippines when I retired if I can convince the wife.
I’ve been to the Philippines many times and speak the language.
I wouldn’t retire in the city of Manila if I were you. Too much traffic and getting around is a bear.
It’s even harder to keep up with the “ laws” when a government agency changes what it chooses to change and ignores what it chooses to ignore and operates by executive order
Making sense is not allowed. Stop it. Drink the coolaid.
If you are still stuck living in a city, how is retiring much better than working?
Bingo. We are now living in a land governed by regulations as much as by laws. And as you noted, a regulation can be changed by executive order. A regulation can also be changed by the whim of some bureaucrat.
That is not a characteristic of a Republic. It is a characteristic of an Empire.
A free country is no longer free when you can’t move out of it.
:: ...Mistakes People Make When Retiring Abroad... ::
And I thought this would be a “Kardashian” article about Caitlyn/Bruce Jenner.
Investing in a Syrian passport might be your best retirement move
Free everything in most of Europe and the USA
WSJ might also consider the lack of the rule of law...
The Mountains are a good place to hang ‘em up! Lotsa snow, fresh air and all kind of furry critters to see!
the main problem is that they now require the overseas banks to file forms with your interest income. And then you have to file income taxes every year.
I am merely retired in the Philippines, but if you run a business here, they tax your income if you make too much.
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