{"id":10981,"date":"2017-04-16T09:00:41","date_gmt":"2017-04-16T13:00:41","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=10981"},"modified":"2020-11-06T11:13:11","modified_gmt":"2020-11-06T16:13:11","slug":"heres-take-ira-offshore-6-steps","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/heres-take-ira-offshore-6-steps\/","title":{"rendered":"Here\u2019s how to take your IRA offshore in 6 steps"},"content":{"rendered":"

Here\u2019s how to take your IRA offshore in 6 steps<\/strong><\/h2>\n

In this article, I\u2019ll list the steps necessary to take your US retirement account offshore. Whether you\u2019re looking for asset protection, privacy, or investment diversification, here\u2019s how to take your IRA offshore in 6 steps.<\/span><\/p>\n

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Step 1: Determine if your IRA is eligible to go offshore<\/b><\/h2>\n

Before you can move your cash, you must determine which of your retirement accounts are eligible to go offshore. Only accounts that are vested can be moved out of the United States. <\/span><\/p>\n

A vested account is one that\u2019s under your control. In most cases, an account vests when you leave your employer and take the IRA with you. So, <\/span>a vested account is typically a retirement account from a previous employer<\/b>. <\/span><\/p>\n

It\u2019s possible that a portion of your account with a current employer has vested. If you\u2019ve been working at the same company for 10+ years, you might be able to move a portion of the account offshore. You should speak with HR to see if any of your IRA has vested. <\/span><\/p>\n

You can also take certain defined benefit plans offshore. If the plan can be converted into an IRA, and in doing so becomes vested, you can move that plan offshore. Eligibility will depend on your defined benefit plan documents. You\u2019ll need to check with your administrator.<\/span><\/p>\n

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Step 2: Move your IRA to a custodian that allows for offshore transfers<\/b><\/h2>\n

Once you know which accounts are eligible to go offshore, you\u2019ll most likely need to move them to a different custodian. Most US firms make money selling your investments. They earn a commission managing your IRA account and don\u2019t want you to move it out from under their control. <\/span><\/p>\n

There are a few custodians that allow for <\/span>offshore IRA LLCs<\/span><\/a>. They charge a fixed annual fee of $400 to $600 rather than making money selling investments. <\/span><\/p>\n

Note that this move must be done as a transfer and <\/span>not a rollover<\/span><\/a>. If you have multiple accounts, recent changes to the IRS rules make the rollover a problem. However, <\/span>you can make an unlimited number of transfers of your retirement account<\/span><\/i> (moving it from one custodian to another). Remember that a transfer is not a rollover.<\/span><\/p>\n

We\u2019ll be happy to introduce you to a custodian that supports offshore accounts. \u00a0<\/span><\/p>\n

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Step 3: Setup an offshore IRA LLC owned by the IRA<\/b><\/h2>\n

Once you have an account number at your new custodian you can form an offshore IRA LLC. The owner of this account will be your IRA\u2026 not you personally and not the custodian. <\/span><\/p>\n

For example, if your custodian is <\/span>Midland IRA<\/span><\/a>, the owner of the IRA LLC might be as follows: \u201cMidland IRA, Inc. FBO John Smith #55-5555555\u201d with the number representing your account at Midland. FBO = for the benefit of.<\/span><\/p>\n

The offshore LLC must be formed in a zero tax jurisdiction, one that allows for single-member limited liability companies. The single member of your IRA LLC is your IRA account. <\/span><\/p>\n

We also focus on countries with strong asset protection laws. For this reason, I like the Cook Islands, Nevis and Belize. The final selection will depend on your banking needs and other factors. <\/span><\/p>\n

If you\u2019re very concerned about asset protection, you might read the following on using the Cook Islands for maximum protection: Maximum Offshore Safety with a Cook Islands Asset Protection Trust <\/a><\/span><\/p>\n

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Step 4: Draft a custom operating agreement establishing you as the manager of the offshore IRA LLC<\/b><\/h2>\n

Now we need to establish you (the beneficial owner of the IRA account) as the manager of the offshore IRA LLC. This is done by drafting a custom operating agreement which lists in great detail your rights and responsibilities. <\/span><\/p>\n

The bottom line is that you must manage the money in the IRA LLC just as a professional investment advisor would. You should make decisions based on what will maximize returns to the IRA\u2026 and those decisions should not benefit you personally.<\/span><\/p>\n

For example, you can\u2019t borrow from the IRA LLC, can\u2019t use it to buy a home to live in it (even if you pay fair market rent), and can\u2019t use the funds to pay personal expenses<\/span><\/p>\n

Likewise, you can\u2019t guarantee any of the investments of the IRA. This means you can\u2019t guarantee a loan made to your IRA LLC. All loans taken out by the LLC must be non-recourse secured only by IRA money without a personal guarantee from the beneficial owner.<\/span><\/p>\n

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Step 5: Open an offshore bank account for your IRA LLC<\/b><\/h2>\n

Your IRA is sitting with a custodian that allows for offshore investments, your IRA LLC is incorporated in a secure offshore jurisdiction, and you have a detailed operating agreement giving you control of that LLC. Now it\u2019s time to open an offshore bank account. <\/span><\/p>\n

The bank selected will depend on the size of the account. If you plan to invest in real estate, and will thus maintain a minimum balance in your offshore account, I recommend Caye Bank in Belize. This bank has high fees but low minimum balances. For more, see: <\/span>http:\/\/www.cayebank.bz\/<\/span><\/a><\/p>\n

For accounts of $20,000 and up I recommend Capital Security bank in the Cook Islands (<\/span>https:\/\/www.capitalsecuritybank.com<\/span><\/a>).<\/span><\/p>\n