{"id":12064,"date":"2017-06-17T09:00:26","date_gmt":"2017-06-17T13:00:26","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=12064"},"modified":"2020-09-17T08:39:48","modified_gmt":"2020-09-17T13:39:48","slug":"first-flag-planted-offshore-ira","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/first-flag-planted-offshore-ira\/","title":{"rendered":"Your first flag planted offshore should be your IRA"},"content":{"rendered":"
The first flag planted offshore is often the most important for the American expat. It signifies your intent to protect your assets and begin the process of joining the international community. To become a global citizen. To find better and more secure investments, no matter where that quest takes you. <\/span><\/p>\n In this article I\u2019ll consider why your IRA should be your first flag offshore. Then we\u2019ll look at how to move your IRA out of the United States and under your control. \u00a0<\/span><\/p>\n The most portable investment we Americans have is our retirement account. And, after our homes, these accounts are also our largest investments. The average IRA holder at 50 years of age has $215,000 in their account. <\/span><\/p>\n Since we can\u2019t do much to protect our homes from creditors, or diversify that investment out of the dollar and out of the <\/span>risks in the US<\/span><\/a>, this leaves our retirement accounts. IRAs, Roth IRAs, 401ks and most defined benefit plans can be moved out of the country and used to plant that first flag offshore. <\/span><\/p>\n I think your US retirement account should be the first flag offshore because it accomplishes four basic goals: <\/span><\/p>\n First, an offshore IRA moves free cash offshore where investment returns are typically higher and more diverse than what’s available in your Schwab account. From here you can invest as you see fit. For example, rental real estate, <\/span>physical gold<\/span><\/a>, stocks and bonds, timber such as <\/span>teak<\/span><\/a> (this has become the top investment in 2017), or use your retirement money to get <\/span>residency in Panama<\/span><\/a> or Nicaragua. <\/span><\/p>\n Many of us are earning 2% or less in the United States. When we take these accounts offshore offshore, they often jump to 12% or more. <\/span><\/p>\n Second, an offshore IRA protects your most important liquid asset from country risks, currency fluctuations (assuming you hedge or avoid USD offshore), creditors, and government levies. Moving your retirement account offshore get\u2019s it out of harm’s way. <\/span><\/p>\n For example, the <\/span>IRS can seize your IRA<\/span><\/a> account for back taxes. They can also take any cash you have offshore if it\u2019s in a foreign bank that has a branch in the United States. The best protection from any creditor is to move your IRA out of the US and into a bank that doesn\u2019t have a branch in the United States. <\/span><\/p>\n And you must perceive some risks in the political battle that\u2019s raging in Washington DC. No matter your political affiliation, you should recognize this <\/span>war on Trump<\/span><\/a> is sure to have a significant impact on our currency and investment returns. <\/span><\/p>\n Third, taking your IRA offshore puts the account under your control. You\u2019re the one who selects the investments and writes the checks. The investment returns of your retirement account rest 100% with you. <\/span><\/p>\n This means you can search out and select investments that a typical advisor wouldn\u2019t be willing to take on. For example, no one but you is going to travel to Panama, Nicaragua and Colombia to find the best rental property. <\/span><\/p>\n And you can go in on investments with your friends. If three people want to each invest $100,000 from their IRAs to purchase a hotel in Belize, that\u2019s fine. If these are three unrelated persons, they\u2019ll need three IRA LLCs and a corporation in the country where the property is located. If a husband and wife combine their retirement funds they need only one joint LLC. <\/span><\/p>\n Of course, you\u2019ll need to follow the US rules. To maintain the tax status of your IRA, you must treat the account just as a professional investment advisor would (or should). This means you can\u2019t borrow against it, can\u2019t personally benefit from the investments, and must generally make decisions based on what\u2019s best for the account, not you personally. <\/span><\/p>\n The bottom line is that moving your IRA offshore gives you control and allows you to plant that first and most important flag offshore. <\/span><\/p>\n Fourth, an offshore IRA can provide very significant tax advantages for sophisticated investors. Here\u2019s how to use a <\/span>UBIT blocker<\/span><\/a> offshore. <\/span><\/p>\n When you invest IRA funds using leverage or a mortgage in the United States you generate <\/span>Unrelated Business Income<\/span><\/a> which is taxable as earned. <\/span><\/p>\n Let\u2019s say you buy a rental property in the US with $150,000 from your IRA and a $150,000 non-recourse loan. Half of the rental income and half of the capital gains will be subject to UBIT at about 35%. Yes, the capital gain is taxed at 35% in this situation.<\/span><\/p>\n <\/p>\n If you made this same <\/span>real estate investment offshore<\/span><\/a> using a UBIT blocker corporation, you can eliminate US tax completely with 100% of the gains flowing into your IRA LLC tax free. <\/span><\/p>\n You\u2019ll still pay capital gains tax in the country the property is located. With UBIT, I\u2019m talking about US taxes on the gains. To maximize worldwide taxation, you might use your IRA to invest in zero tax countries like Belize or low tax countries like Nicaragua. See: \u00a0<\/span>Where to buy international real estate in 2017<\/span><\/a>.<\/span><\/p>\n For exactly how to take your retirement account offshore, see: <\/span>Here\u2019s how to take your IRA offshore in 6 steps<\/span><\/a>.<\/span><\/p>\n\n