The idea of looking at a qualified IRA Retirement Account only comes up once for most ordinary citizens. Although this is something that most people should look into.
Not only that, but some people often extrapolate what we talk about here at Nomad Capitalist. They always look at going where you’re treated best or finding better places for your money. Some may even look at other parts of their financial plans, and so on.
While this is a goal of ours since we’ve put all these free resources for all of you, there are certain things that most people, especially American citizens, should look into.
One of these things is an IRA Retirement Account.
Sure, people may realize that there may be better places where you can put your money in.
So today, we’re going to share three of the things that you can do with your IRA Retirement Account once you realize that there may be better options out there for you.
An IRA Retirement Account for Americans
What do you know about an IRA Retirement Account?
Speaking about Andrew’s personal experience, he learned about the financial system and the types of retirement accounts when he was in his early twenties.
As people probably know by now, he has always been an entrepreneur.
Andrew once got a call from his Domestic Tax Advisor and he said, “You’re starting to do pretty well. So why don’t we get every tax deduction that we can? Why don’t you throw in some money in an individual retirement account, and we’ll save you a couple of bucks.”
Growing up, Andrew had a pretty good financial education.
So upon hearing that suggestion from his Domestic Tax Advisor, he remembers thinking that he does value the control of his money. Not only that, but he doesn’t want to put his money into a “dark hole” where he can’t touch it for some time.
It would’ve been more than 36 to 37 years without paying any penalty. On top of that, you’re getting the tax deduction now.
However, if you’re doing okay and do a decent job investing, then that money will compound.
So when you take it out, you’re going to pay taxes then. This doesn’t sound like such a good plan when it comes to asset protection and diversification if you ask us. However, this is just our personal opinion, so don’t take us literally.
Naturally, there are different options to this.
Although, a lot of people get into the IRA Retirement Account trap.
So do you know what to do with your money once it’s already in an Individual IRA?
When Should You Start Thinking About Your IRA Retirement Account?
Some people are not in their early twenties, but they’ve been saving into their IRA Retirement Account for quite some time. These are people who know what to do with that money.
Perhaps you’ve had a job in the United States, and you qualified for 401K or 403B. Although, what if you leave that job because you’re going overseas?
Sure, you can roll it over, but what do you do with that money?
Frankly, this money is already in the system, and you can’t take it out. So this is when you’ll have to pay the penalty, and you might have to pay taxes if you end up taking it out before it’s due.
This is one of the concerns that we’ve had with the system.
When you don’t have the proper control, and so the “other party” can always change the rules.
There’s the idea that in an IRA Retirement Account, you can put your money now so you can take the tax deduction while you’re still making a good profit. Then when you’re old, you can take it out at a lower tax rate because tax rates are lower for retirees. Although, the talk of rising tax rates makes this claim seem like nonsense.
Sure, your taxes are going to be higher later.
Then again, whose goal was it to retire with less money than they made when they were working?
Shouldn’t it be our goal to retire early with more money through proper investing and saving?
Plus, you know that you should be a good financial steward for your money. So the whole “individual retirement account” never really worked for us.
Looking at an IRA Retirement Account from a Nomad Capitalist Perspective
Here’s a little disclaimer, we’re not financial advisors. Not only that, but this isn’t any sort of financial advice.
You know the deal, but if we’re looking at this situation with our own money, we can do it in the context of a Nomad Capitalist.
So here are three things that you should do if you ever find yourselves in the system:
Moving Your IRA Retirement Account Offshore
First, you can take the IRA Retirement Account, and you can move it offshore.
This way, if you have a couple of different IRAs or just one IRA Retirement Account, that’s completely fine.
Although, this can vary depending on what’s available to you.
There’s an option where you can take that and generally move it offshore through an offshore IRA corporate structure or an LLC.
The jurisdictions we would use for these structures are often different from those we would use for an active one. So the jurisdictions that we might tell you to avoid could be good for a more passive structure. Then you might be able to find more banks or brokerages that are willing to work with you.
Potentially, there are investments that you could do that are more profitable. Not only that, but you can put it overseas to where you have that level of comfort that your money isn’t sitting in the United States.
Sure, there’s some paperwork, and there will be a couple of ongoing costs.
However, if you want to be in the low six-figures to do this, we know that there are guys out there selling this to everyone with a $26,000 IRA Retirement Account, and it just doesn’t make sense. This is why we’ll never fund an IRA Retirement Account, in our opinion.
Again, you can do the math, but generally speaking, we wouldn’t really feel comfortable doing it with less than $100,000 or $150,000.
Then again, that’s just my personal advice.
So you can move that overseas, and you can open up your investment opportunities. That’s going to make sense if you have more money to your name.
Closing Your IRA Retirement Account
Second, you could just close your IRA Retirement Account outright.
Sometimes when people are moving overseas or even expatriating, they’re renouncing their citizenship.
So technically, they don’t want to leave behind any assets in the United States.
Now, there’s nothing wrong with leaving behind assets if you’re moving overseas. Even if you’re giving up your citizenship, you can keep things like bank accounts. In so many cases, you can keep your IRA.
More often than not, people think that when you do this, something magical happens.
Then again, what some people want to do, especially if they’re under that low six-figure number, is that they just opt to close it out.
They don’t want their money in the system, they don’t trust the government with it, and they don’t trust them not to change the rules.
They want to protect themselves from all that, and it’s not a lot of money. You just have to pay the tax or the penalty, and you’re going to get out of the system.
So the second option is to just close it out and take the hit right. Sometimes, it’s worth just getting out of the system and paying the right price.
We also think you shouldn’t be “cheap” about it, and we’re not saying you should close your Individual IRA. All we’re saying is that you should consider that sometimes, there’s a price to pay for having that kind of flexibility.
Leaving Your IRA Retirement Account in the Country
Third, the thing that you can do if you’re leaving the country or if you’re expatriating is to just leave the eye right there.
As we’ve mentioned above, there’s nothing wrong with that. Again, even some people who expatriate just leave in their Individual Retirement Account.
Sometimes, they’ll structure it to where they have $500,000, and they don’t want to move it overseas. Sure, they don’t have any more income in the United States, and since they’ve expatriated, they’ll be able to take out a certain amount of money every year to lower their taxes.
So if you take out $500,000 at once, that’s going to be worse than a five-year plan. This is why people will just leave it there, and maybe they’ll take it out over time.
Perhaps, they’ll take it out over time or maybe when they’re a bit older. Some people wait until they’re at the “appropriate age” where they can take it out on better terms or just leave it and use it as usual.
Don’t get us wrong, some people just feel comfortable having their money in an IRA Retirement Account. They don’t think that the United States Government is going to change the rules, so they’re comfortable just leaving it there.
What Should You Do with Your IRA Retirement Account?
You see, there’s nothing wrong with all these now.
In some cases, you might want to take it to whoever is holding the money for you. Then you have to make sure that if you’re moving overseas or making a drastic change in your life, that choice will be a great fit for you.
Bear in mind that some institutions have their own policies. Then again, let us remind you that there’s nothing wrong with just leaving it there.
So what we ask people is, do you trust the system?
That’s the same question that we would ask you.
Can you answer that question for yourself? Do you believe that your taxes are going up? Do you believe that your investments in an IRA Retirement Account are the best ones?
Sometimes it’s worth paying to get out of a bad marriage. As it were, sometimes it’s worth keeping. Although, sometimes, it’s worth just making some tweaks to it.
So these are three options that people generally talk about doing when they’re moving overseas and when they’re cutting their ties with the United States when it comes to handling their retirement accounts.