General News & Insights

Even before they disclose their particular circumstances and retirement goals, expats in the United States who are seeking cross-border financial advice bring a whole host of challenges to the wealth manager's table.

From stringent IRS reporting rules to concerns and confusion over the suitability of various retirement planning vehicles – for example, whether to choose a QROPS, SIPP, IRA, 401(k) or other account – trying to factor in every detail is an enormous responsibility for the 21st century wealth manager. Imagine then trying to juggle such challenges with the day-to-day responsibility of managing portfolios.

Is there a more dispiriting financial situation than working hard and investing intelligently for your assets only to have some or indeed all of them pinched from your back pocket by a sophisticated scam?

The Internal Revenue Service (IRS) has recently warned against this possibility, calling on taxpayers to beware of "a surge of new, sophisticated email phishing scams", particularly during the Christmas and New Year period.

This warning follows IRS data charting how the incidence of online scams rose by 60% during 2018 – an especially dramatic rise when it is considered that each of the previous years recorded a decline. Furthermore, with the vast majority of scams occurring at the end and the beginning of the year, it is clear that the IRS message is timely.

Being married to a non-US citizen has many wonderful advantages, but when it comes to your interactions with the IRS, it can sometimes feel like it puts you at a disadvantage. However, the truth is that IRS forms and reporting regulations are a trial for anybody, particularly those who have foreign-based assets or income. It is just that having a foreign spouse is likely to mean that you have to do things a little bit differently to the majority.

Here, Blacktower (US) LLC offers some information for couples with cross border tax planning considerations.

Retirement planning for ourselves is not always straightforward, so, is planning for the retirements of our offspring something we should be concerned about or is it something they should take care of for themselves?

According to a recent CNBC article, "the idea isn't so farfetched" and on reflection it is not difficult to understand why.

For start, we really don't know what the future will hold. For example, in 10, 20 or 30 years what will an IRA, Roth IRA or 401k look like and what will the terms be? Can we be sure our children will be able to access these accounts. And for those with cross-border wealth management concerns, we cannot confidently predict the future of QROPS, SIPPs and other private pensions and pension transfer vehicles. Lastly, and perhaps most importantly, against the background of ageing populations in the west, who knows whether state and federal social security systems will still be viable.

Retirement planning for most is about ensuring that we are safe, secure, happy and, hopefully, free of financial worries in our later years, while for some it is also about providing a legacy for heirs, whether family, friends or charity.

But in the United States achieving these goals is notoriously difficult. Not only do US citizens have to worry about the cost of healthcare, they also have to deal with a demanding Internal Revenue Service that can sometimes seem to undermine their goals.

It's little wonder then that many of the most enterprising and adventurous Americans choose to retire abroad. Not only can such a move be a rewarding new chapter in people's lives, it can also offer practical financial benefit – for example, access to free or affordable healthcare and a wealth of investment opportunity, especially in regard to pensions. It can also improve health in other ways as countries like Spain, Portugal, Italy, Japan and the Nordic and West African nations all have national diets that are proven to be very healthy – by contrast the US ranks last among industrialised nations in terms of the healthiness of its diet.

United States-based retirement investors stand to benefit from proposed changes to the way in which information about life insurance and variable annuity products is communicated at the point of contract.

The proposals, which have been drafted by the Securities and Exchange Commission (SEC), aim to help investors be clearer about the contents and implications of financial product contracts, particularly in relation to risks, fee structures and other features of these particular insurance products.

The SEC would also like providers to make contracts available to retirement investors in multiple forms, including digital and hardcopy with supplementary information also available online.

Retirement savers in the US, expats and US citizens alike, received a much welcome boost recently with news that the IRS's most recent inflation adjustments will allow for higher levels of contributions to Traditional IRAs, ROTH IRAs and 401(k) retirement plan accounts in 2019.

The Internal Revenue Service (IRS) is notorious for its strict and forensic approach to foreign-earned income and for both expats and internationally-minded US citizens few areas of wealth management are as onerous as foreign income reporting requirements and cross-border tax planning.

However, the fact that the requirements in this area can be so complex and the forms involved so detailed and demanding that sometimes this takes away from what is essentially a simple question: how do you differentiate between income earned in the US and income earned abroad?