Here’s How To Take Your IRA Offshore
Are you thinking of using your IRA to invest abroad? Do you want to move your retirement account out of the United States? There are two very different ways to accomplish these goals. First, you can use a simple self-directed IRA and allow your custodian to make whatever investments you need. Second, you can take control over your account by forming an offshore IRA LLC.
With a self-directed IRA, you can direct the custodian where to invest your money, but you don’t control the transaction. If your custodian is experienced in offshore deals, he will probably do as instructed. If he is not comfortable with a situation, then he can refuse to make the transfer.
With an offshore IRA LLC, you have complete control over your retirement account. Your custodian makes only one transfer… into your offshore IRA LLC. From there, you are responsible for all transactions.
Which One Is More Suited To You?
If your objective is to make a variety of investments, hold property in an offshore LLC, and gain complete control over your retirement account, then you need an offshore IRA LLC.
If you are making one investment, especially into foreign real estate, then you might be satisfied with a self-directed IRA.
For small retirement accounts or those with very few investments, the costs of an IRA LLC might outweigh the benefits. For example, a $40,000 account might be sufficient to buy into development in Belize, but you may not be willing to pay $3,000 to fully structure the transaction. Therefore, economics can dictate the investment be made in a self-directed IRA without the benefit of an LLC.
If your IRA is $150,000, you wish to purchase properties in various countries and invest the balance in stocks and bonds through an offshore brokerage, then an offshore IRA LLC is required. It is unlikely that a self-directed custodian will agree to handle multiple complex transactions, and he certainly will not allow you to trade your own funds in an offshore brokerage.
In other words, a self-directed IRA custodian will need to handle each and every trade, investment, and transaction, and he will charge you for each. If you have an active investment account, these fees will probably eat you out of house and home right quick.
By utilizing an offshore IRA LLC, you eliminate these transaction costs. The custodian makes only one investment – into your IRA LLC.
The offshore IRA LLC also gives you complete control over your investments. If you are concerned with the US government taking over your retirement account, then you need an offshore IRA LLC.
Take Your IRA Offshore
There is approximately $18 trillion in US retirement accounts and the national debt is nearly $17 trillion and rising. Food for thought…
When you make an investment using a self-directed account, it is the custodian who is making that acquisition on behalf of your retirement account. If an order comes through demanding the funds be returned to the US for any reason, then your custodian will be forced to liquidate the investments for whatever he can get and pay over to Uncle Sam. As the signor on all accounts and investments, he will have the authority and ability to comply with such an order.
As I said above, if you have an offshore IRA LLC, the custodian invests in that entity and you take it from there. This means that all investments and accounts are held in the name of your LLC and you are the only signer on these accounts and transactions. The custodian can request that you return the assets to his control, but it would be impossible for him to compel you to do so.
To put it another way, it would be impossible for the Custodian to go into court in Belize and gain access to your bank or brokerage accounts there because he is not a signor to the accounts and has no power over them. He would have no standing or right to sue you or your LLC in a foreign country as his authority is limited to US retirement accounts and transactions where he is a signor.
This protection only applies to offshore IRA LLCs. If you are using a US LLC, rather than an offshore IRA LLC, and hold accounts in the US, then the US government can simply issue a levy. The same is true of accounts and assets held in Canada, France, and the UK.
Take Your IRA Offshore Before It’s Too Late
The above example is carrying things to the extreme and assumes you are willing to ignore the demand of the custodian to return your funds to his control. A more practical benefit of the offshore IRA LLC is that it creates a level of impossibility or impracticability in forcing the return of IRA assets. The US government, in its infinite wisdom, may decide to grandfather in these offshore IRA LLCs and block all future formations.
In fact, most experts, providers, and IRA custodians agree on only one thing: that the offshore IRA LLC is not long for this world. This structure gives the average person too much control over his or her (possibly only) significant asset and allows them to move it out of the reach of Uncle Sam much too easily. If and when the US government decides to come after retirement accounts, their first attack will be against the offshore IRA LLC.
When this happens, those who have formed and funded their offshore structures will likely be left alone. The stigma and difficulty of going after a number of retirees will generate way too much fear and bad press. Can you imagine trying to criminalize and force the sale of foreign real estate? That would be very ugly.
Far more likely is that existing offshore IRA LLCs will be left alone and grandfathered into a new law or rule. Forming and funding new offshore IRA LLCs will become an impermissible distribution that is taxable and a penalty will be imposed. Such a change would probably not even rate a blip on the national news cycle.
And this can be accomplished with a very simple change: investing in a single-member entity / LLC can be added to the list of impermissible transactions (collectibles, life insurance, businesses of which you own more than 50% or are a highly paid employee, etc.). Alternatively, managing an offshore IRA LLC can be deemed to be operating a business, and you own 100% of that business, so it is improper. Either way, future transfers to offshore IRA LLCs can be eliminated with the stroke of a pen, no act of congress, vote, or other law needs to be passed.
Therefore, the best and only way to ensure you are allowed to control your own finances and make your retirement account confiscation proof is to place it into an offshore IRA LLC and invest outside of the United States before the tides change. By holding accounts at banks that have no branches in the US, in physical gold, foreign real estate, and in other assets not easily seized, you have the best protection available.
Here is probably the most extensive ebook on Everything You Ever Wanted To Know About Eliminating Your Taxes, Protecting Your Assets And Regaining Privacy Over Your Life And Investments. It is called The Ultimate Guide To Going Offshore.
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