What Hap­pens to Your IRA Ac­count When You Make Aliya?

By Dou­glas Gold­stein, CFP"- open an Amer­i­can bro­ker­age ac­count when you live in Is­rael

Jerusalem Post - - FRONTLINES -

What should you do with your Amer­i­can IRA ac­count (In­di­vid­ual Re­tire­ment Ac­count) when you live in Is­rael? Your ini­tial thought might be to cash out your IRA ac­count and trans­fer the funds to Is­rael. But that's prob­a­bly not too wise be­cause of the tax-de­ferred na­ture of an IRA. Mov­ing your re­tire­ment ac­count to Is­rael may be ex­pen­sive IRAs are good ve­hi­cles for re­tire­ment sav­ing be­cause they let you de­fer pay­ing Amer­i­can taxes on cap­i­tal gains, div­i­dends, and in­ter­est un­til the money is with­drawn. There are reg­u­la­tions about when and how you can with­draw funds. (Check with an ac­coun­tant, as this ar­ti­cle does not con­sti­tute tax ad­vice.) De­pend­ing on your age, you may be hit with high penal­ties if you cash out the ac­count and trans­fer the bal­ance to Is­rael. Ad­di­tional-ly, by trans­fer­ring the pro-ceeds to Is­rael, you, as an Amer­i­can ex­pat, may need to re­port the as­sets held in for­eign fi­nan­cial in­sti­tu­tions to the IRS. There is a so­lu­tion! In­stead of cash­ing out your IRAs when you make aliya, con­sol­i­date them into one re­tire­ment ac­count and leave the funds in Amer­ica, where they can con­tinue to grow tax. de­ferred. There are two ad­van­tages to do­ing this: • Avoid penal­ties and taxes in­curred when you with- draw the funds from your IRA too early. • Amer­i­can tax re­port­ing be­comes eas­ier be­cause your sav­ings are still held in Amer­ica. Keep­ing money in Amer­ica means that you don't need to add the ac­count to your FEAR form. The best way to man­age your IRAs in the United States is to work with a cross-bor­der friendly com­pany that can help you from Is­rael once you make aliya. Profile In­vest-ment Ser­vices, Ltd. can help you buy/sell as­sets in your IRA just as Amer­i­can bro­ker-age firms in the U.S. do. Learn more here: Profile-Fi­nan­cial.com/money-aliya

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