What Happens to Your IRA Account When You Make Aliya?
By Douglas Goldstein, CFP"- open an American brokerage account when you live in Israel
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saving because they let you defer paying American taxes on capital gains, dividends, and interest until the money is withdrawn.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