Is your investment account in jeopardy because of your address? If your American brokerage firm no longer wants to hold your account because your legal address is not in the United States, you may find useful information in this free Profile Toolkit.
Financial companies follow strict regulations for all their clients. However, some companies are deterred by the expenses and time involved in managing accounts belonging to U.S. citizens living abroad. American expats in this situation are left wondering what to do with their U.S. assets once they leave the United States.
Should you transfer your assets out of the United States?
While it is useful having sufficient assets in Israel to cover day-to-day expenses, the question of whether you should move your entire investment portfolio to Israel is complicated. There are points you should consider on both the American and Israeli side.
Beware of losing American tax-beneficial status. If you withdraw money from an American retirement savings account (IRA, 401(k), etc.) and bring it to Israel, not only do you lose the tax-deferred appreciation in America, but you may trigger tax bills and other penalties.
On the Israeli side, there is the issue of incurring additional American taxes if you invest in Israeli mutual funds. Furthermore, Israeli firms may not want to service American clients since it subjects them to further tax reporting to a foreign government (the IRS has a very long reach).
For these reasons, many American expats find it useful to keep their savings accounts in America – for the simple reason that Israel does not have the equivalent of FDIC or SIPC insurance. Once you find a cross-border-friendly brokerage firm (a specialty of Profile Investment Services, Ltd.), you can do a custodian-to-custodian transfer of assets from the old company to the new one to avoid any tax consequences of early withdrawals from retirement accounts.
If you want more information about maintaining your U.S. investment accounts while living in Israel, download the Profile Toolkit here, which contains a variety of resources and links.
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published March 20, 2017. Updated April 2019