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Should Your Money Make Aliya?

aliyaA middle-aged couple that recently made aliya told me that they were concerned about how to handle the IRAs (Individual Retirement Accounts) that they left back in the United States. They thought that they either needed to leave these assets with a broker in a different time zone or empty the accounts, pay taxes and early-withdrawal penalties, and move the money into their Israeli shekel account.

If you have U.S.retirement funds, you do not need to move the accounts. In fact, by taking the money out of IRAs and bringing it to Israel, you might be creating an unexpected tax bill. Along with having to pay tax on the amount you move, you may also get hit with a 10% penalty for early withdrawal.

You can still handle the accounts from Israel

I generally advise olim who have IRAs to leave the account with an SIPC-insured brokerage firm. Even if you created a financial plan while living in the United States, you should create a new post-aliya plan. Choose a financial planner who is familiar with both your American investments and life in Israel to guide you through this process. And when it’s time to implement the new plan, choose a local firm that provides quality service while holding your account in America with the familiar investments (stocks, bonds, mutual funds, CDs, etc.).

New olim should consider how much of their money they should they bring to Israel with them. After all, your new life is in a shekel-based market. Determine your cash-flow needs, consider the importance of currency diversification, and divide up your money in proportion with the asset allocation model you have developed in your financial plan…. You don’t have a financial plan?  Get to work on it right away, since that will be the blue-print for your successful financial aliya. Since the focus of your new life, your salary, your checking account, and your new pension plans will now be based in Israel, having geographical diversity (by keeping your IRAs in America) may be prudent. At the end of the day, know that you have choices about where to place your funds and that you can handle your U.S. investments from your new home.

If reading this article has given you an interest in IRAs, click here for an introduction to IRAs, including Traditional and Roth IRAs.

Douglas Goldstein, CFP®, investment advisor, is the co-author with Grandmaster Susan Polgar of Rich As A King: How the Wisdom of Chess Can Make You a Grandmaster of Investing and director of Profile Investment Services, Ltd. which specializes in cross border investing and financial planning.


Profile Perspectives is a personal finance blog based on articles Doug Goldstein, CFP®, director of Profile Investment Services, Ltd., published in The Jerusalem Post. The information posted is purely informational and does not constitute investment or tax advice. Advertisements on the site are neither endorsements nor recommendations. Consult your professional advisors before making any investments based on articles or advertisements. Securities offered through Portfolio Resources Group, Inc., member of FINRA, SIPC, MSRB, FSI. Accounts carried by Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation.

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