2020 is the year to take your IRA offshore. The US markets have never been more volatile and the US government has never been more hostile to certain types of investments. The crypto and ICO markets have disrupted Wall Streets profits and the government is moving to protect these high dollar donors. The bottom line is that you should get your biggest cash reserve, your IRA, 401-K or Defined Benefit plan, out of the United States in 2020.
The Dow just had its worst week in two years. The Dow Jones industrial average popped more than 300 points, recovering from deep early losses in what still amounted to the worst week in two years.
And do you remember December 2, 2017 when fake news tanked the markets? ABC News falsely claimed that then-presidential candidate Donald Trump ordered Lt Gen Michael Flynn to contact Russian officials during the 2016 campaign. Following the report, the stock market tanked.
My point here is that the US markets are extremely volatile. The constant attacks on President Trump are fueling the fear, not to mention the pending increase in interest rates. No matter your political affiliation, you must see the financial risk in the infighting.
2020 is the time to get your most important portable asset, your retirement account, out of harm’s way. Now is the time to take action to protect your cash reserve by moving it abroad.
Once you move your IRA offshore, you’ll have access to advanced crypto investments and ICOs not available in the United States. The US SEC has pushed most quality ICOs out of the country in order to preserve the IPO and other capital raising industries. The only way to invest in these ICOs is through an offshore structure such as an Offshore IRA LLC.
The US SEC pushed ICOs offshore by requiring them to go through the same procedures and compliance as an IPO. Thus, anyone issuing an ICO will need to have the same capital for legal and other fees as someone issuing an IPO. A major benefit of an ICO over an IPO is that they’re relatively low costs and eficity… and that early stage businesses can issue them without all of the overhead of an IPO.
As a result, most companies are avoiding the US and issuing their ICOs offshore. If you want to get in before the venture funds and silicon valley angel investors have picked over the best deals, you need to be offshore.
Then there are the IRA tax benefits only available offshore. Yes, if you’re a sophisticated investor, moving your retirement account offshore in 2020 can reduce your taxes! Here’s how:
When you buy real estate in an IRA with a mortgage, or buy stocks or crypto with a loan, the income associated with the leverage is called “Unrelated Business Income” or UBI. If you use leverage in the US, you pay tax on this portion of your gain (UBIT).
For example, let’s say you buy a rental property in the US using your IRA and a mortgage for 50% of the value. About half of your rental profits will be taxed in the US at (basically) ordinary rates before they get to your IRA. When you sell the property, about half of the capital gain will be taxed at ordinary rates before flowing into your retirement account.
Enter into this same transaction offshore with a foreign property and you pay zero US tax. Simply set up a UBIT blocker corporation in between your offshore IRA LLC and the real estate holding company and eliminate US tax on leverage.
- Remember that US rules still apply to your IRA when it’s offshore. Thus, any loan or leverage must be a non-recourse loan.
So, that’s why you want to take your IRA offshore in 2020. Here’s how to get your retirement account out of the United States.
You first need to move your IRA to a custodian that allows for international transfers. Most providers don’t because they make commissions selling you their investments. When your account is offshore, you’re in control and don’t need to pay a commission to anyone.
Once your account is with a friendly custodian, we can incorporate an offshore IRA LLC for you. We’ll form this offshore company in a zero tax max privacy jurisdiction such as Belize, Nevis, Cook Islands, etc. This LLC is owned by your retirement account with you as the manager of the structure.
Next we open a bank account at an international bank. You will the signor on the account and the LLC is the owner. You can send and receive wires, and make investments, as the manager of the LLC.
Finally, when all of this is done, your custodian will invest some or all of your retirement account into your offshore IRA LLC. You can move all of the account at once, or whatever portion you’re comfortable with.
Also, a husband and wife can use separate LLCs or one structure. Only married couples can commingle their retirement accounts like this.
I hope you’ve found this article on how and why to take your IRA offshore in 2020 to be helpful. For more information, please contact us here. We’ll be happy to help you structure your offshore IRA LLC and open your bank account. Here are a few additional articles on your IRA that may help answer some of your questions:
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