Challenges for Americans abroad (Part 2): frozen IRAs and pensions

User Written by Trey Archer on August 30, 2016.

Challenges for Americans abroad (Part 2): frozen IRAs and pensions

We already saw in Part 1 of this series that making safe and smart investments for Americans abroad has become difficult, but to make matters worse US expats now have to worry about frozen IRAs and pensions. Before, it was easy for expats to maintain their IRAs or pensions while living abroad. These days, however, some of the biggest pension providers in the country will not take on US expats as clients, and they’ll also cancel or freeze the accounts of existing clients who move abroad.

For the same reasons many investment houses and online trading platforms won’t accept US clients or liquidate the accounts of US expats, the same goes for IRAs and pensions. These companies just don’t want to deal with the rigorous IRS tax reporting associated with US expats, they’re also are worried about misfiling which could result in hefty penalties.

So what do you do if you wake up one day in a foreign country and you get a letter from your pension provider stating that your IRA is frozen? It seems like a nightmare scenario – something that could never happen to you – but it can.

Fortunately, if there’s a will there’s a way. Frozen IRAs and pensions are nothing to be scared about.

Infinity and our partnered asset managers Tilney Bestinvest (the UK’s largest private wealth manager with 28 billion USD of assets under management) has a system that will allow those with frozen IRAs and pensions to rollover their funds, unfreeze them, and start re-contributing/growing their money just like they did before when they were still living in the States. This is possible with both Traditional and Roth IRAs, and 401(k)s. After rolling over, you’re subject to the same tax regime and regulations (such as maximum contributions, withdrawal dates, etc.) that you would have back in America.

I recently had a family come to me who had their IRA frozen by Fidelity once the company found out they were living in Beijing. After discovering that there was hope and an easy way out of this serious dilemma, they rolled their Traditional IRA over to Tilney Bestinvest and got their funds rolling again. In fact, they’re even experiencing higher growth than what they had with Fidelity! The problem was swiftly solved and they couldn’t be happier.

Today’s age of FATCA has certainly made financial planning for US expatriates mind numbing, causing many to think why is this happening to me??? With the crackdown continuing and no end in sight, it seems that frozen IRAs and pensions will only continue and become more prevalent for US citizens living abroad. Luckily, you can solve a problem before it happens (or even solve the problem after it happens) with legal rollover IRAs and pension schemes specifically tailored for Americans abroad.

Feel free to get in touch if you have any questions about frozen IRAs and pensions. You can email me at trey.archer@infinitysolutions.com, or call me: +86 138 1620 7274.

Trey Archer

Trey Archer

Posted on August 30, 2016 in American Expatriates.