Get Your Retirement Plan Offshore Now!
The End Of Offshore Retirement Plans May Be Imminent
By Larry Grossman
It has finally happened. The current administration has begun to take steps that could lead to the effective ban of offshore investments in your retirement account. You need to act now before the door is slammed shut for good!
Originally, investors wanted to go offshore for greater access to non-US investments and at the time the dollar had been on a major decline. Then, when the dollar strengthened, lawsuits became a major problem and clients continued to go offshore to seek greater asset protection.
Now, the government needs to stave off offshore investment as a precursor to prevent capital flight. And it’s looking to seize control of your retirement account, similar to what Argentina did with their citizen’s retirement accounts.
The Government Doesn’t Want You To
Invest Outside of the Us!
Now that the Obama administration is creating more Czars than Imperial Russia, the notion of a single government entity controlling your retirement plan is very much on the forefront.
Let’s get to the facts and why I suddenly see a change on the horizon.
Some companies in the IRA business have been sloppy. They don’t particularly like foreign investments of any kind. They prefer the ease and simplicity of having only a few mutual fund and asset allocation plans to choose from, none of which means sending money offshore.
The rub is it is perfectly legal to make offshore investments in your retirement plan, (for now). The best way the government can take the first step towards stopping offshore retirement plans is to make it expensive, man-power intensive and time consuming to the point where custodians just won’t allow it. That’s step one. Nationalization of your retirement plan to follow.
What will this nationalization entail? For starters, the government will explain that it offers the baby boomers—who have seen the last decade of wealth destroyed in last year’s market crash—a guarantee that their retirement plan will be free from risk.
The only asset that the government considers risk free, however, is government debt—treasuries. And with China concerned about the future of the dollar, mandating another market for treasury investment is exactly what the government needs.
And who knows, the government could mandate allocation as well, meaning that your retirement portfolio could include shares in companies such as GM and AIG whether you want to own it or not.
There’s just no telling how much the government will push using the pretext of the financial crisis.
It makes perfect sense in a weird sort of way. First the government stops you from taking your retirement plan offshore without actually changing the rules and raising a lot of eyebrows and then they step in and take over all plans still onshore—and decide what you can invest in. After all, liberty is always eroded, never directly assaulted.
Clients have been asking me how the government will bring existing plans offshore back. In all likelihood, plans already offshore will be grand-fathered and can remain there. It would take too much effort on behalf of the United States to cajole offshore retirement money back when the lion’s share is still stateside and easy to grab.
Plan your Legal Move Offshore
IRAs, SEPs and Keoghs require the use of an IRA Custodian and there are less than a handful of custodians who will let you do this.
Qualified plans such as 401(k)s, profit sharing plans, defined benefit plans and others have a plan administrator and trustee. These two entities must be willing to allow for the assets to go offshore and the plan document must be reviewed to ensure there are no “artificial constraints” written into the plan document, which would restrict your flexibility.
Once your plan has been transferred to an offshore-friendly custodian you have a number of options:
Option #1: Move Your Funds to a Non-U.S. Bank
• Safely explore the most rewarding corners of the financial world – far from the clutches of greedy bureaucrats, litigation-hungry lawyers and datamining snoops.
• Privately trade stocks, bonds, mutual funds, CDs, precious metals and currencies.
• Buy into elite mutual funds, managed by awardwinning financial analysts who consistently outperform their American counterparts, year after year.
Option #2: Form an International Business Company (IBC) or Foreign CorporationAdds a significant layer of asset protection and privacy to your business (if established in the right jurisdiction)
• Can be used to open a foreign banking/trading account, purchase an annuity, make foreign investments directly or purchase real estate.
• Physical possession of your funds rests with a non-U.S. company in a jurisdiction that may not recognize judgments awarded by U.S. courts.
Option#3- Direct Foreign Investment
In many cases you may make a direct purchase of a non-US asset or investment such as foreign real estate or a private placement. Again, there can be significant advantages to using a non-US LLC to make the direct investment especially when it comes time to take a distribution from the asset.
Larry C. Grossman, CFP®, CIMA®