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onebusyman

May 4, 2015, 11:00 AM

Post #1 of 14 (6837 views)

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Investing Money in the US - 401K

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I hope this is an appropriate spot to post this. I have a 401K that has been managed by Fidelity for the past few years including the 3 years that I have been in Mexico. They do an annual review over the phone with me and I pay them to move my money around and keep it growing. I've been very pleased with the growth and happy to pay them to manage it so I don't have to think about it.

In our annual review this morning we were talking about long term goals etc. when I mentioned that I lived full time in Mexico. The agent got a bit flustered and asked if he could call me back in a few minutes. I said of course. When he came back he informed me that since I live outside of the US that Fidelity could no longer manage the account for me and that they would stop that in 60 days. Their rule being that they can only manage an account for someone who actually lives in the US. I can continue my account with them but I would need to select stock products and distribute my money in those and manage it myself.

I don't know much about investing money for a good return and have gladly let them manage my money putting it in stocks, bonds, etc. What do other retirees do from Mexico? Do you manage your own investments (401K specifically?) Are there other companies that you use that manage your investments and don't mind that you are in Mexico?

My address of record is in Seattle, my US bank account is there as well. If I had not mentioned to this agent that I was in Mexico he would never have known but I've done this review for the last 3 years and have always been open to the fact that I live here....go figure.

Any information or thoughts would be helpful. I have two months to decide what to do with this money. Thanks....



sparks


May 4, 2015, 1:48 PM

Post #2 of 14 (6810 views)

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Re: [onebusyman] Investing Money in the US - 401K

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10 years ago when stock market was good it was easy to watch different funds and their returns .... and shift money around online.

When shit hit the fan the company warned me they were changing everything soon and if I put it in a certain fund it would be locked in at 3%. That's where it's been ever since.

Sparks Mexico Blog - Sparks Costalegre


DavidHF

May 4, 2015, 3:34 PM

Post #3 of 14 (6795 views)

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Re: [onebusyman] Investing Money in the US - 401K

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Same thing happened to me with Vanguard just last week. Truth is, I don't need an advisor any longer. My investments are all in Vanguard Index funds; Total Stock Market, Total International, and Total Bond Fund. Vanguard funds have the lowest expenses.


RickS


May 4, 2015, 3:46 PM

Post #4 of 14 (6792 views)

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Re: [onebusyman] Investing Money in the US - 401K

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Without knowing what you 'life situation' is, it would be hard to respond. For example (and I'm not asking you to divulge here):
+ how old are you
+ single or married/family
+ what is the general $size of your holdings
+ do you have social security and/or a pension coming in
+ do you own your home and if so, does it carry a mortgage
+ what is your 'risk tolerance'
+ are you looking for 'monthly' income and if so, about how much
+ are you averse to using annuities
+ are you looking to 'preserve wealth', maybe for beneficiaries, or will you need 'all' your assets for your own preservation
+ etc etc etc

Otherwise (or without this knowledge), David's recommendation is a good general approach but it's hard to say.

If you have/know of someone you trust that is a 'financial advisor', I'd schedule a visit.

Good luck


morgaine7


May 4, 2015, 7:15 PM

Post #5 of 14 (6772 views)

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Re: [onebusyman] Investing Money in the US - 401K

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As with DavidHF, Vanguard informed me a few years ago that they could no longer provide fund advising for non-US residents. My address of record is in Mexico. Luckily, I'd had 2-3 annual sessions by phone before that, and since the suggestions worked out well, I simply continued along the same lines with minimal meddling. I'm single, retired, and collecting Social Security.

Kate


Aaron+

May 5, 2015, 10:03 AM

Post #6 of 14 (6724 views)

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Re: [morgaine7] Investing Money in the US - 401K

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What, everyone here is a boy/girl scout? If a U.S. citizen, vote in US or otherwise maintain a US address (home, relative, friend, mail forwarding service, etc), tell them what they want to hear -- that you "live" in the USA. Live in Mexico but go back to the USA 30 days or more, or possibly do such, for any 365 day period? Dept of Treasury/IRS considers you a bonafide U.S. resident.

Otherwise there are "off shore" investment opportunities, but if through a U.S. firm, you will find, what, a 30% withholding of any capital gains or interest, which can be partially or more recovered after filing a U.S. personal income tax return.

Already informed on yourself to Vanguard or Fidelity etc.? Call back, say you were misunderstood,..


RickS


May 5, 2015, 11:12 AM

Post #7 of 14 (6717 views)

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Re: [Aaron+] Investing Money in the US - 401K

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Well, I guess it doesn't take just a girl/boy scout designation for one to decide to stick to the truth when discussing some important matters in life. Just my take.


onebusyman

May 6, 2015, 8:00 AM

Post #8 of 14 (6666 views)

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Re: [onebusyman] Investing Money in the US - 401K

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Thank you for your thoughts on this subject. I have researched the Vanguard products, like what they offer and may move my money to them. Thanks again...


RickS


May 6, 2015, 8:55 AM

Post #9 of 14 (6650 views)

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Re: [onebusyman] Investing Money in the US - 401K

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Take a look at Charles Schwab also......


tfyoung


May 9, 2015, 2:01 PM

Post #10 of 14 (6534 views)

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Re: [RickS] Investing Money in the US - 401K

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I don't know how pertinent this is. This is a transcript of a chat I had last July with Schwab. I was mainly asking about the rebates for foreign transaction fees connected to their brokerage accounts. But he does mention residency during the chat.

1:24:18 PM : Terry: Initial Question: Is an IRA considered a brokerage account? We will be retiring to Mexico and will need to use ATMs to withdraw funds from our account. If our IRA is with Schwab, will we be eligible to receive the unlimited ATM fee rebates?

1:24:49 PM : Mike Riccio: Welcome to Schwab New Accounts! Happy to help you today.

1:25:09 PM : Mike Riccio: An IRA is a brokerage account, but does not come with a debit card.

1:25:34 PM : Terry: Can it be linked to a Schwab checking account?

1:26:04 PM : Mike Riccio: Yes, you can set that up. For example, if you want to make contributions from checking to the IRA.

1:26:43 PM : Terry: What about income from the IRA deposited to the checking account?

1:27:14 PM : Mike Riccio: Sure, you can do that as well, however, each will be an IRA tax reportable distribution.

1:29:23 PM : Terry: Understood. So, when we retire, which should be next year, we can move my pension lump and 401k into a Schwab IRA, set up a Schwab checking account, and receive rebates for whatever ATM fees we incur in Mexico. Is that correct?

1:29:54 PM : Mike Riccio: Yes. However, Schwab Bank accounts are only available to U.S. residents.

1:31:10 PM : Terry: We currently reside in the US and will maintain a US address after retirement.

1:31:54 PM : Mike Riccio: If you are considered a U.S. resident, then you will be able to use that account. What other questions may I assist with at this time?

1:32:21 PM : Terry: That's all for now. thanks

1:32:34 PM : Mike Riccio: You are welcome.

1:32:39 PM : Mike Riccio: Thank you for your interest in Schwab. Please feel free to exit this chat window at any time.


YucaLandia


May 10, 2015, 2:53 PM

Post #11 of 14 (6482 views)

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Re: [tfyoung] Investing Money in the US - 401K

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36 total days** back in the States per year maintains residency.

But those same 36 days mean you must be part of ACA/Obamacare (with a few exceptions), or pay annual penalties to the IRS:

Basic Information on Americans Living Abroad and ACA Obamacare
.
.
**37 days for leap years - like 2016.
-
Read-on MacDuff
E-visit at http://yucalandia.com

(This post was edited by YucaLandia on May 10, 2015, 2:57 PM)


Aaron+

May 10, 2015, 3:24 PM

Post #12 of 14 (6476 views)

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Re: [tfyoung] Investing Money in the US - 401K

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Thanks for the transcript. Bottom line: Mike Riccio and I are on the same page, despite RickS' putdown May 5 when he implied that I am untruthful with respect to claiming U.S. residency. The truth is that there are a number of ways to talk about who is a U.S. resident.

When I was in U.S. government service, the rule of thumb told us was that if our longterm intention is to reside in the U.S., then we (citizens) are a legal resident of the U.S.A. even if stationed in Timbuktu. And for voting purposes, one can vote for federal (but not state and local) offices in the last state in which one lived even if one has no further connection to that state.

In my case, although I am living in Mexico and have no economically foreseeable way of moving back to the states, my longterm intention/prayer, if I could, would be to return to the U.S.A., indeed to s.e. Pennsylvania.

Being a U.S. resident for tax purposes is only one definition, and relies on the IRS' "substantial presence test," which has many interesting convoluations; see
http://www.irs.gov/...antial-Presence-Test Reading it I discovered that while I knew that if one spent over 31 days in a given year, etc., etc., but if one spends less than 183 days over a three year period, that does not constitute a "substantial presence."

However, the Treasury/IRS also has a broader definition of a "U.S. person" for FATCA purposes. An ING Belgium publication has a well-worth-the-read section on "Private Individuals" which indicates that ING, at least, has not adopted (if their paper is still in force) the "sky is falling" position of apparently most major financial institutions of blanketly terminating accounts of U.S. persons living outside the U.S.A. See: https://www.ing.be/...ts/USCornerFAQEN.pdf

Seems being a "U.S. person" for FATCA is as inclusive as being a U.S. citizen with a U.S. mail forwarding address even though living outside the U.S.A.

Some institutions go overboard on the definition of residency. For example, the U. of Michigan requires that someone applying for in-state tuition declare

Quote
that you intend to remain in the State permanently.

Of course, what one intends to do and what one finds it necessary or preferable to do can change, and that does not mean that one is not telling the "truth" unless fleeing Michigan as soon as graduating is one's intent.

My home state of Pennsylvania basically wants me to prove that I have an ongoing relationship with Penna. to maintain a Penna. driver's license. While their website calls for two pieces of ID of softer type "B", one such piece is "official" mail. In practice, the license renewal card I received at my legal permanent residence and my presence in their office is all that is required, plus payment of course.

Since the discussion topic really centered on how one can claim U.S. residency with respect to maintaining U.S. financial accounts, even when living outside the U.S., am I reallly stretching the "truth" of the elastic definiton of resident by adhering to FATCA definition of "U.S. person"? After all, FATCA is the law applicable for individuals (etc.) maintaining or opening U.S. financial accounts.


Aaron+

May 10, 2015, 3:35 PM

Post #13 of 14 (6474 views)

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Re: [YucaLandia] Investing Money in the US - 401K

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Well, those "few exceptions" certainly could include many of us, and most U.S. retirees over age 65, those with Medicare coverage.


RickS


May 11, 2015, 9:46 AM

Post #14 of 14 (6428 views)

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Re: [Aaron+] Investing Money in the US - 401K

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"....despite RickS' putdown May 5..."

Sorry, Aaron, no real offense meant.

RickS
 
 
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