How Non-Americans Can Benefit from American Brokerage Accounts
By Douglas Goldstein, CFP®, helping people in Israel with their U.S. IRA and investment accounts
This past week, my office phone rang several times with non-Americans inquiring about opening American brokerage accounts. Given the hassles of dealing in some of the more popular offshore jurisdictions, and given the many benefits of keeping investments in the United States, these people were happy to see how they could easily invest through a U.S. brokerage firm.
Why non-Americans have American investment accounts
There are two parts to having a brokerage account: the specific investments and the “custodian” of the funds. The specific investments include what stocks and shares you own, or which mutual funds or bank deposits you choose. The “custodian” of the assets is normally a major bank or brokerage firm that is responsible for safeguarding the securities, executing the trades, printing the statements, arranging for checkbooks and credit/debit cards for the clients, and other back-office services. Before investing money you must choose both a custodian of your account (the firm) and the individual investments (stocks, bonds, etc.)
Non-Americans frequently use a U.S. brokerage firm to custody their assets. Here’s why:
Send me an email (doug@profile-financial.com) for a detailed report on the additional benefits of non-Americans having American brokerage accounts.
Is it legal for non-Americans to open U.S. accounts?
Not only are NRAs (non-resident aliens) allowed to hold their assets in America, they are actively encouraged to do so. From the standpoint of the American government, having foreign investors maintain accounts in the United States helps to keep the U.S. markets as the top trading locations in the world. In fact, the United States doesn’t tax the interest and capital gains that foreigners make on their U.S. assets (This is a general discussion. Be sure to speak to your own tax advisor before investing.) If you would like to learn about the advantages of global investments through a U.S. investment firm, please call my office at 02-624-2788.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
What Should You Do About the FBAR?
By Douglas Goldstein, CFP® - helping olim handle U.S., IRA, investment, and brokerage accounts from Israel
Whenever I mention the acronym FBAR, Americans often say one of two things: “F what??” or “I don’t need to do that.”
What’s an FBAR?
The “Report of Foreign Bank Accounts” (FBAR) is a required U.S. government form, which is important in the post-9/11 world. The purpose of the form is to alert the authorities about accounts held outside the United States with a total value of $10,000 or more at any time during the year.
Can I just skip it?
Bad idea. If you have reportable FBAR assets that you don’t disclose, the fines can be severe. If you neglect to file or file incorrectly, you can face fines that are greater than the value of the accounts that you didn’t include on the form.
The FBAR is due on June 30 for the preceding year. It provides a list of accounts that you have signature authority on, interest in, or are named as a holder, so the American government can track the path of money transfers in the hope of reducing money laundering.
Is there a legal workaround?
The only legal workaround is to have the sum of foreign assets below the reporting threshold. Since that is difficult if you have pension and/or savings accounts in Israel, another option is to minimize the number of accounts you must report. If you keep the majority of your assets in an American bank or brokerage account, you don’t need to list those funds on an FBAR. Why? Because the government only requires reports on foreign accounts.
If you want to review your investment accounts to see whether they’re considered to be in the U.S. or abroad, send me an email with the details (doug@profile-financial.com) or call (02-624-2788) and let’s begin a conversation.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
Is Your Brokerage Account in Danger of Being Sold Out?
By Douglas Goldstein, CFP®
Imagine if your brokerage firm called you up and told you that they were going to sell out all of the positions in your brokerage account within the next 60 days. “Why?” you ask them. They respond that due to increasing regulatory restrictions they will no longer service your account. They give you two options:
Believe it or not, many people in Israel are receiving such a call. This is because they are U.S. citizens, and due to tough regulations regarding Americans living abroad originally intended to prevent money laundering, many U.S. financial institutions no longer want to work with any non-resident Americans. Though it may be disconcerting to receive notification that a long-standing relationship with a brokerage firm is about to end, there is no need to panic. Americans living in Israel who have U.S. brokerage accounts have a solution to this issue.
If you know anyone in this situation, it is important that they speak with a financial advisor well-versed in cross-border financial issues before they sell out their accounts and transfer the funds to Israel. That is because, if securities are sold, people might inadvertently trigger an unwanted tax bill.
Don’t cash out your American account
Instead of cashing out your American account, find a cross-border-friendly firm that specializes in opening brokerage accounts for U.S. citizens who have a foreign address. Then you can transfer your assets “in kind” to the new account. This new account can even be an exact replica of the old one, unless you specifically want to change your investment structure. Best of all, by moving everything over in kind (without selling), there are no tax consequences or reporting requirements.
At the same time, take this opportunity to update and review your financial plan and investments with an investment advisor who is licensed in both the United States and Israel.
To find out more about opening a U.S. brokerage account from outside the United States, go to www.Profile-Financial.com/Account.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
Can Your Israeli Bank Provide Investment Services?
By Douglas Goldstein, CFP®
Have you found that your Israeli bank no longer provides investment services for Americans living in Israel?
Because if onerous reporting requirements to the American government, many Israeli banks have stopped opening investment accounts for U.S. citizens. While dual American-Israelis can continue with banking and checking services, they need to look elsewhere for their long-term investing.
Where can Americans open investment accounts?
If American firms turn away U.S. citizens with a foreign address and Israeli banks don’t open accounts for Americans, how can Americans living in Israel have investment accounts?
That’s where investment firms with relationships with U.S. brokerage houses and Israeli investment licenses come into play.
Profile Investment Services, Ltd. is one of a select few companies that is able to help, as we work with an American brokerage firm (Portfolio Resources Group, Inc.) that understands there are law-abiding Americans who live and work globally, but want to maintain U.S. brokerage accounts.
In many cases, people denied investing services by their Israeli banks can enjoy the same solution. In particular, if a person wants to buy stocks, bonds, or mutual funds, he can easily transfer funds from an Israeli bank to a U.S. brokerage account.
Can I open a U.S. brokerage account even though I live in Israel? YES!
One reason that investment firms turn away overseas clients is because they do not have the ability to get to know them well and give them appropriate advice. On the other hand, companies that have a presence in Israel can meet their clients face-to-face to help them handle their U.S. brokerage accounts. When I meet new clients, I ask a lot of questions in order to fulfill my obligations under the “know your client” rules so that I can give them the most appropriate advice. In doing so, I am then able to help them open and maintain their U.S. brokerage accounts. Transferring the money to the new account is usually as easy as filling out a form and asking the local bank to move the funds.
If you have assets in Israel that you would like to move to an American brokerage account, see if Profile Investment Services, Ltd. can help by calling 02-624-2788.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates.
Read This Before You Transfer Your Money to Israel
By Douglas Goldstein, CFP®
Making aliya doesn’t mean you need to close your American brokerage accounts. In fact, there are many sound reasons for maintaining assets in America even if you move away. Think twice before converting your American retirement accounts to shekels and bringing them to Israel.
Recently, some American brokerage firms asked their non-resident clients to transfer out their accounts. To the shock of many clients in Israel, major firms decided to end long-term relationships with them. If this has happened to you (or you fear it may) don’t panic! There are U.S. brokerage firms who realize the benefit in holding accounts for law-abiding and tax-paying citizens who just happen to have a non-U.S. address.
As a licensed financial planner in both Israel and America, I have over two decades experience in counseling American olim on the benefits of maintaining an American brokerage firm while living in Israel. Benefits include:
Tax Reporting Benefits
Keeping an American brokerage account makes tax reporting to America easier. Long and short term gains/losses are reported according to the IRS’s requirements. This makes tax filing easier (and cost efficient) on 1099s, FBARs, and other forms that Americans must file.
Tax Deferred Benefits
Keeping an American IRA (Individual Retirement Account, often held through a U.S. brokerage company) or 401(k) account means you can maintain the tax-deferred status of your funds. If you transfer these accounts out of America, you lose the tax benefits and may owe penalties as well.
Safety Benefits
American brokerage accounts have an extremely high level of transparency and government regulation. While SIPC insurance can’t guard an investor against regular market volatility, the protection gives millions of investors peace of mind.
You Can Keep American IRAs
Keep in mind that an American brokerage account can’t replace your local Israeli bank account for day-to-day services. Nor can it hold Israeli pension and Israeli tax-free savings accounts (which may still be taxable in America).
However, an American IRA account is the most common tool used to maintain the tax-deferred status of retirement funds. For help managing your American brokerage/retirement accounts in Israel, watch the video at www.Profile-Financial.com/USAccounts and call Profile Investment Services, Ltd., (02) 624-2788.
Neither Profile nor PRG provides tax or legal advice. Consult an accountant or an attorney on such matters before taking any action.
Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation about handling your U.S. investments from Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates