Tuesday, September 12, 2017

Gimme (A Tax) Shelter

For various reasons including poor service I had planned to rollover my 401(k) account form my present custodian to a new financial institution. In  doing so, I have discovered a serious problem that potentially affects all American expatriates who also  have retirement accounts in U.S.based financial firms.  The door is closing or has already closed against American citizens living abroad who  hold such assets. And many of these companies are not only refusing to accept rollovers or other fund transfers, some are kicking existing account holders to the curb by unilaterally closing and paying off their accounts, possible  tax repercussions to these customers notwithstanding.

Why are they doing this? The reason is explained very well in an article in "International Advisor: us institutions to expats take your retirement''.  Briefly, since the early 2000's security has  become a paramount issue with banks and other financial  institutions. So they want to know whom they're dealing with in their  customer base, which they really can't for account holders who live abroad. But it's only recently that they've intensifying this campaign and at the expense of us expats. Further, partly thanks to FATCA, foreign governments have started reciprocally creating unnecessary red tape for U.S. financial custodians firms whose expat customers. reside in their jurisdictions. So these firms just don't feel that dealing with overseas Americans is worth all this hassle. They are taking the easy way out, and there are no federal regulations to stop them.

A few days ago I contacted a financial consultant who was mentioned in the above ''International Advisor''piece, He suggested Charles Schwab as a possible option for stranded expats, and according to their website  ''Explore Schwab’s services for U.S. Expats''  they do indeed accept accounts for Americans living abroad. However a responder in the ''International Advisor'' comment section said that's not so, Charles Schwab is also giving their expat customers the boot. Sure enough I found a site that confirms this policy  ''Charles Schwab Announces Account Closures For US Citizens In Five Countries, More Expected''.

The Trump administration favors deregulation of  the finance industry. Hence  it it's unlikely that  Americans residing outside the country will get any relief for our predicament in the near future from that government  branch. However the legislative branch may be a different story when it comes to recourse. So today I sent a message regarding this issue to U.S. Senator Elizabeth Warren who as a political and economic progressive and member  the Senate Committee on Banking, Housing, and Urban Affairs may be of  assistance in correcting this state of affairs.  Whether that actually happens of course remains to be seen. So at least for the time being,  limited options may be a brick in the wall that we expats, despite our being American citizens, will just have to put up with.

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