Can I continue to hold my US brokerage and retirement accounts once I leave the US to move overseas ? 

The good news is that in principle, not only can you keep your US brokerage account with a US bank or custodian, but in most circumstances it makes sense to do so, especially in the first years after one moves away.

This blog is updated from a previous 2023 posting.

But first, if you’re new to life in Israel, check out our other helpful reads on moving abroad, cross-border finances, and tax-smart planning for expats:

What to do when you get kicked out of your US brokerage account

Can one use a US Power of Attorney in Israel, (and vice versa)?

Immigrating to Israel

A guide to retiring in Israel

Checklist for moving to Israel

A guide to investing abroad

Israel expat case studies

Social Security for expats

Financial planning for US citizens living abroad

Selling a house in Israel as a US citizen

Why US Expats should look before they leap into a Roth 401k

Compliance with reporting of foreign assets: tips for US expats to avoid stress

What expats need to know about Brokerage Accounts for non-US residents

And now let’s get into the blog!

***While not the main topic of today’s note, you may pay additional US PFIC taxes on unrealized gains if you invest in non US-domiciled mutual funds, ETFs or other pooled investment vehicles.***

What’s The Issue?

So while the good news is that one can keep one’s brokerage account in the US, two problems arise. 

Firstly, not every bank or brokerage house is willing to continue to service non-US residents. This is owing to internal compliance and cost considerations. 

Institutions that will no longer hold accounts for non US residents include Morgan Stanley, Merrill Lynch, JPMorgan Chase, UBS, Wells Fargo, Edward Jones, Raymond James and LPL. We also understand that Fidelity and Bank of America may continue to allow you to hold accounts there, but may restrict new purchases or limit purchases of certain investment products. 

Some new expats have been able to keep their accounts at these institutions for a while, because either the internal advisor has some sway with the compliance department, or because you are using a US address, where you are not resident. 

These are not optimal solutions, as they can be reversed by the institution once they realize that you are living overseas. And then you will receive notice to move your
accounts within a certain period of time. This can be problematic, because if you are issued an IRA rollover check, which the institution can do unilaterally, then it will be
taxed unless placed in a new IRA within sixty days. 

What Can I Do?

The solution is to transfer to a US custodian that does accept accounts from US citizens with foreign addresses. These include Schwab, BNY-Pershing and International Brokers. For those of you who prefer to work with an investment advisor, we at Nardis are able to set up accounts with your foreign addresses at all three of these custodians, with our custodian of choice at present being Pershing. 

The Custodian Issue:

Even if your US custodian is able to continue to hold your accounts there, it is very difficult to continue to receive quality customer service from overseas. We will not list the institutions where clients have reported difficulties, but this becomes an issue when requesting 1099 tax document or executing a Required Minimum Distribution from a 401k or IRA. 

It seems that as large institutions revert to using AI and chatbots in order to save in costs, they are also saving on training those human employees who remain, in the finer arts of customer service. Therefore we recommend consolidating one’s assets with those custodians that accept foreign accounts. 

Once again, for those of you who prefer working with an advisor, we have a full client service team based in the US who works with US expats in Israel, UK, South Africa, Australia, Portugal and India. 

And One Final Question:

Finally, the question arises when does it make sense to set up local brokerage accounts in your country of residence ? 

For people over age 73, who are taking required minimum distributions, we suggest if possible to start placing the proceeds in an investment account in the country of your residence. This account should own individual stocks and bonds, or US-listed exchange-traded funds, in order to avoid US PFIC taxes. The reason for this is for you to have easier access to funds, as one gets older and potentially loses legal capacity. This is a topic for another blog, but feel free to reach out to us to discuss this and other cross border financial planning needs.

Thinking About Moving to Israel?

You don’t have to make a radical, all-or-nothing decision overnight. But if the idea has been on your mind, we’re happy to chat.

Whether you’re:

• Planning retirement in Israel,
• Exploring dual-continent work,
• Or just curious what the day-to-day is like here,

…feel free to reach out. We’ve also published the following blogs you might find helpful:

• Checklist for moving to Israel
• Immigrating to Israel
• A guide to retiring in Israel

Let’s Talk!

We’re financial advisors for expats, both in the U.S. and in Israel, and can help you plan your transition wisely. Whether you’re balancing U.S. assets, managing remote income, or figuring out healthcare and retirement, we’ve helped dozens do just that.

If you are moving to Israel or another country and don’t know where to start when it comes to the financial side of things, please contact us.

If you would like to receive our updates, please sign up for the Nardis Advisors newsletter to stay informed.

SUBSCRIBE to the Nardis Advisors YouTube channel or ongoing updates related to the markets, economy, and finance for expats.

CONTACT US to schedule a time to speak with Nardis Advisors regarding your portfolio and personal financial plan.

Disclaimer

Nardis Advisors LLC (“Nardis”) is a Registered Investment Advisory Firm regulated by the U.S Securities and Exchange Commission in accordance and compliance with applicable securities laws and regulations. Registration does not imply a certain level of skill or training. Nardis does not render or offer to render personalized investment advice through this medium. The information provided herein is for informational purposes only and does not constitute financial, investment or legal advice. Investment advice can only be rendered after delivery of the Firm’s disclosure statement (Form ADV Part 2) and execution of an investment advisory agreement between the client and Nardis.