(USA topic) Fidelity IRA account issues based on living abroad

[Jingthing]

People that have Fidelity IRAs (under 500K USD) and have been using a U.S. address will know what I'm talking about already.

Fidelity is taking aggressive actions in this matter.

If you have any information or tactics on how to deal with this, things that have worked, or not worked, pitfalls in communicating with them etc.

I'd like to open a discussion.

This might be a case where a group on PM would be a good place to start as it can really be a sensitive matter.

If you don't know what I'm talking about and you have an IRA and you plan to expatriate, I can make these suggestions.

Before you move, transfer your IRA to Schwab, probably U.S. Schwab.

Then I think later you can transfer that to International Schwab IRA with your Thai address.
DEFINITELY get out of Fidelity BEFORE you expatriate. I think also Vanguard and some other big names too.

As a general rule, with any brokerage, there are issues now with holding U.S. mutual funds while living abroad. In preparation, you may want to change all that to ETFs, and stocks and bonds. Those will seamlessly transfer to Schwab International.

It is also a very bad idea to hold non-U.S. mutual funds in a global account if you're a U.S. citizen. Stick with ETFs!

This is serious stuff ... if you can solve this before you expatriate you'll be doing yourself a massive service.

Edited May 30, 2016 by Jingthing

[Jingthing]

I probably shouldn't have made the title here so specific as being about Fidelity only.

This is a huge issue with many brokerages. But Fidelity has indeed been extremely aggressive.

If it interests people this topic can be about this issue more generally.

IRA accounts for people living abroad who have been using U.S. addresses and now due to changing policies have a PROBLEM.

It used to be firms weren't looking to discover such people. A U.S. address was good enough, don't ask don't tell.

Now they're aggressively trying to determine who's doing that, and taking harsh actions when they do, such as freezing ability to buy or sell!

Here is a video which introduces these issues to those that may not be aware.
Again, this is SERIOUS stuff for a lot of people.

And yes, it's not only IRAs. Brokerage accounts generally too:

You might say these firms are making reasonable business decisions. But this isn't about making excuses for them. It's about somehow COPING with this for expats.

To add, the video suggests using a U.S. address as a potential tactic. Well, that's what most of have been doing, but it stopped working for many. People who haven't yet moved abroad have the best options.

In that case I would say forget using a U.S. address. Start clean with a firm that will deal with you openly as an expat. (Schwab and which others I don't know.)

Edited May 30, 2016 by Jingthing

[tonray]

issues ?

[Jingthing]

issues ?

If they determine you're living abroad, they freeze your buying and selling. Yes. Issues.

[Jingthing]

Some links about this:

http://www.international-adviser.com/news/1004914/us-institutions-expats-retirement

http://isaacbrocksociety.ca/2012/07/22/fidelity-investments-refuses-to-service-to-u-s-persons-abroad/

[tonray]

issues ?

If they determine you're living abroad, they freeze your buying and selling. Yes. Issues.

Do you have family or friends where you can use their address for records. That is what most of us do. There is no way they can find out if you do that.

[CaptHaddock]

issues ?

If they determine you're living abroad, they freeze your buying and selling. Yes. Issues.

Do you have family or friends where you can use their address for records. That is what most of us do. There is no way they can find out if you do that.

Keep in mind that the broker will report your interest and dividend 1099 income to the state's taxing authority. If it is a state with an income tax, they may send you a bill for tax due on that income.

[CaptHaddock]

This is old news from Fidelity. They sent those letters out in 2013. The take-home message is that we need to take ALL steps possible to conceal our location from brokerage firms including,

1. using a US mailing address in a no-income-tax state.

2. using a vpn to insure that they only see a US ip. If you happen to be a techie, it's a good additional protection to set up a private vpn server in the US since the commercial vpn services all have identifiable ranges of ip addresses. Netflix has already refused service to commercial vpn ips. So far, the brokerage firms have not taken advantage of ip information, but they may in the future.

3. Make sure all monies going into or out of your brokerage account do so only via a US bank account, preferably one like USAA or Penfed that markets to the military since they are accustomed to overseas clients.

4. Get Google Voice and Hangouts on your cell phone so that you have a US phone number and can receive US SMS messages. Then enable the SMS authentication method with your broker, if available. It's not required, probably increases security marginally, and may draw suspicion that you haven't enabled it.

It is important to realize that it doesn't matter if your broker (or other financial institution) doesn't currently object to your overseas status. They may change their policy in the future and if you have already revealed your location, you could be SOL.

Technology evolves as we all know. Sometimes we will have the advantage in simulating a US presence, but the advantage can swing to detection if they become more motivated.

[lifeincnx]

I have Fidelity stock and ROTH-IRA accounts. No issues as I:

1. Have a legitimate US address

2. Use magicjack on my phone so I have a dedicated US phone number for calling to and from the US. It's VOIP so after the the initial purchase all use is free.

3. Use a VPN with US based server when checking Fidelity online or any other US based finserv companies for that matter.

Issue-free thus far.

[soalbundy]

Has this anything to do with FATCA ? As a British citizen with a German bank account living in Thailand and no connection what so ever with America i was surprised to receive a letter (too late to reply until the 30th) containing FATCA forms to fill out. Seems Uncle Sam's reach is global.

[CaptHaddock]

Has this anything to do with FATCA ? As a British citizen with a German bank account living in Thailand and no connection what so ever with America i was surprised to receive a letter (too late to reply until the 30th) containing FATCA forms to fill out. Seems Uncle Sam's reach is global.

No.

[LotusBoy]

Up the RA!!

[csabo]

I use a vpn to transact via Fidelity without a problem. If logging in without the vpn their system flags. I just log off, start vpn and log back in. Same with Vanguard. Strangely, the only bank that has been a total disaster was Schwab. Locking my account, flagging my name, opening then locking the account again, locking my funds up and demanding wire fees all because I was living abroad when I tried to open the account originally. They said that was a no-no. On a trip back to the states I called them and offered to come in and prove my identity and they declined saying there was no reason to not open the account according to their records. I opened it online in NY, funded it ($1000) and when I returned to Thailand tried to access my money. LOCKED. Called them and now they had all the old notes on my case saying I tried to open an account overseas. Told her I opened the account in NY otherwise obviously could not have funded an account that was never opened. Bank agreed with my reasoning but refused to release my money or give me access to the account. I said "You really won't let me have my own money back??". Bank said they would unlock the account only to wire my funds out but I would have to pay $25 to do that. When I became furious she offered to waive the fee but said I would have to fax a completed wire form to her. She supplied the form via email and the form clearly stated I would be responsible for the fee, nothing about a waiver. I emailed her back to get in writing that the transfer fee was waived and she never replied. I'll be stopping by a NY branch in June and I feel bad for the person working the information counter already.

[CaptHaddock]

I use a vpn to transact via Fidelity without a problem. If logging in without the vpn their system flags. I just log off, start vpn and log back in. Same with Vanguard. Strangely, the only bank that has been a total disaster was Schwab. Locking my account, flagging my name, opening then locking the account again, locking my funds up and demanding wire fees all because I was living abroad when I tried to open the account originally. They said that was a no-no. On a trip back to the states I called them and offered to come in and prove my identity and they declined saying there was no reason to not open the account according to their records. I opened it online in NY, funded it ($1000) and when I returned to Thailand tried to access my money. LOCKED. Called them and now they had all the old notes on my case saying I tried to open an account overseas. Told her I opened the account in NY otherwise obviously could not have funded an account that was never opened. Bank agreed with my reasoning but refused to release my money or give me access to the account. I said "You really won't let me have my own money back??". Bank said they would unlock the account only to wire my funds out but I would have to pay $25 to do that. When I became furious she offered to waive the fee but said I would have to fax a completed wire form to her. She supplied the form via email and the form clearly stated I would be responsible for the fee, nothing about a waiver. I emailed her back to get in writing that the transfer fee was waived and she never replied. I'll be stopping by a NY branch in June and I feel bad for the person working the information counter already.

A cautionary tale that illustrates why we must scrupulously cover our tracks before we come to their attention.

[rapom]

I have Fidelity stock and ROTH-IRA accounts. No issues as I:

1. Have a legitimate US address

2. Use magicjack on my phone so I have a dedicated US phone number for calling to and from the US. It's VOIP so after the the initial purchase all use is free.

3. Use a VPN with US based server when checking Fidelity online or any other US based finserv companies for that matter.

Issue-free thus far.

I also have a Fidelity, Ameriprise and a TRowe Price account. In March, while in Thailand I made a Fidelity online transfer to Bangkok Bank, New York. I have done this several times over last 2 years, never any problems. Since August 1st 2014, Fidelity has banned investors (not just US citizens) living outside the US from opening new accounts or buying and trading in current accounts to buy mutual funds. Current owners that fall under this ban can still deposit money, but only to the money market core fund. Any account owned prior to this date is still valid and dividends will be reinvested and investments can be sold. I still own a home in the US, have a postal address, phone number, pay taxes (US, state, county personal and property) still pay for Medicare and I do think this makes a difference, on your residency status. As for using a VPN for accessing my accounts, I have not done that, but have always had to answer my security question to validate my log-in.

[Suradit69]

I have Fidelity stock and ROTH-IRA accounts. No issues as I:

1. Have a legitimate US address

2. Use magicjack on my phone so I have a dedicated US phone number for calling to and from the US. It's VOIP so after the the initial purchase all use is free.

3. Use a VPN with US based server when checking Fidelity online or any other US based finserv companies for that matter.

Issue-free thus far.

Likewise with Vanguard.

Have used a US address for a long time. Virtually no mail sent to that address anymore since all documentation is available online.

I trade stocks and CEFs & options online quite regularly. Occasionally call Vanguard collect from Thailand.

I don't own mutual funds (other than the brokerage accounts' settlement money market funds), just stocks, CEFs and long or short call options positions. It is almost always through Vanguard that I transfer money to my Bangkok Bank account in New York.

Certainly many Americans who have full time residence in the US travel abroad or spend their summers or winters outside the US and need to access their accounts. I don't see that Vanguard or Fidelity would have the ability or the right to demand that their customers remain within the US borders 24/7 year round.

While I do understand that managing your finances from abroad isn't as easy at it once was or as it should be, I think it's a bit alarmist to advise everyone to flee to Schwab. I have no plans to do that.

Edited May 31, 2016 by Suradit69

[lifeincnx]

I have Fidelity stock and ROTH-IRA accounts. No issues as I:

1. Have a legitimate US address

2. Use magicjack on my phone so I have a dedicated US phone number for calling to and from the US. It's VOIP so after the the initial purchase all use is free.

3. Use a VPN with US based server when checking Fidelity online or any other US based finserv companies for that matter.

Issue-free thus far.

I also have a Fidelity, Ameriprise and a TRowe Price account. In March, while in Thailand I made a Fidelity online transfer to Bangkok Bank, New York. I have done this several times over last 2 years, never any problems. Since August 1st 2014, Fidelity has banned investors (not just US citizens) living outside the US from opening new accounts or buying and trading in current accounts to buy mutual funds. Current owners that fall under this ban can still deposit money, but only to the money market core fund. Any account owned prior to this date is still valid and dividends will be reinvested and investments can be sold. I still own a home in the US, have a postal address, phone number, pay taxes (US, state, county personal and property) still pay for Medicare and I do think this makes a difference, on your residency status. As for using a VPN for accessing my accounts, I have not done that, but have always had to answer my security question to validate my log-in.

I use Bangkok Bank's New York affiliate branch as well for any low cost transfers to Thailand. Bangkok Bank's NY routing number is great for auto deposits into a Bangkok Bank Thai account - get my corporate pension and Soc. Sec. within minutes of it going by ACH.

I too pay CA state and Fed taxes, albeit low.

Edited May 31, 2016 by lifeincnx

[Suradit69]

The video and links above seem to be generated by "financial advisors." Not to impugn any of those sources, but it would seem they all have a self-serving motivation for heightening the alarm. Not saying that they are intentionally misleading, but I'm sure they are not doing it to earn a Boy Scout medal for community service either.

[Suradit69]

I have Fidelity stock and ROTH-IRA accounts. No issues as I:

1. Have a legitimate US address

2. Use magicjack on my phone so I have a dedicated US phone number for calling to and from the US. It's VOIP so after the the initial purchase all use is free.

3. Use a VPN with US based server when checking Fidelity online or any other US based finserv companies for that matter.

Issue-free thus far.

Likewise with Vanguard.

Have used a US address for a long time. Virtually no mail sent to that address anymore since all documentation is available online.

I trade stocks and CEFs & options online quite regularly. Occasionally call Vanguard collect from Thailand.

I don't own mutual funds (other than the brokerage accounts' settlement money market funds), just stocks, CEFs and long or short call options positions. It is almost always through Vanguard that I transfer money to my Bangkok Bank account in New York.

Certainly many Americans who have full time residence in the US travel abroad or spend their summers or winters outside the US and need to access their accounts. I don't see that Vanguard or Fidelity would have the ability or the right to demand that their customers remain within the US borders 24/7 year round.

While I do understand that managing your finances from abroad isn't as easy at it once was or as it should be, I think it's a bit alarmist to advise everyone to flee to Schwab. I have no plans to do that.

"It is almost always through Vanguard that I transfer money to my Bangkok Bank account in New York."

Edit: I meant to say that I regularly transfer money from Vanguard to my Bangkok Bank account in Thailand through the Bangkok Bank branch in NY.

[TallGuyJohninBKK]

I guess the main question here would be:

If one is following the good advice that Captain Haddock listed in his post above (U.S. mailing address, U.S. phone number, U.S. VPN for online log-ins, etc.), why would any brokerage ever have any reason to question one's residency status?

If one follows those kinds of common sense precautions and doesn't do anything themselves to rub the issue in the face of their brokerage (like trying to fund a new account from a foreign, non U.S. source), I haven't heard of any great problems in this area thus far.

On the other hand, I have read posts here by members who said they had, in phone conversations with their brokerage, admitting that they were living in Thailand. Doing that, IMHO, is just asking for trouble.

[retarius]

Move to Vanguard…no issues.

[skatewash]

I guess the main question here would be:

If one is following the good advice that Captain Haddock listed in his post above (U.S. mailing address, U.S. phone number, U.S. VPN for online log-ins, etc.), why would any brokerage ever have any reason to question one's residency status?

If one follows those kinds of common sense precautions and doesn't do anything themselves to rub the issue in the face of their brokerage (like trying to fund a new account from a foreign, non U.S. source), I haven't heard of any great problems in this area thus far.

On the other hand, I have read posts here by members who said they had, in phone conversations with their brokerage, admitting that they were living in Thailand. Doing that, IMHO, is just asking for trouble.

The worrisome thing is that should the financial institution become interested in doing so it is possible to determine if someone's US address is a Private Mail Box (PMB) at a Commercial Mail Receiving Agency (CMRA). It is my understanding that a financial institution can also determine if someone is using a VPN when accessing their online accounts. The fact that they perhaps don't do this scrutiny now is not a guarantee that they will not start doing it in the future to cover themselves against increased government enforcement of Know Your Customer (KYC) regulations. I would like to continue to keep my US financial institutions because it seems clear to me that there's nowhere in the world where I can maintain my current investments for less money, less inconvenience, and less risk than in the US. How long I will be able to do so depends on how much the government pressures the financial institutions for enhanced enforcement and how they react to such pressure. The trend doesn't seem to be going in a very desirable direction. Following the precautions, while sensible advice in itself, doesn't protect one from detection if the financial institution is motivated enough to do so.

[skatewash]

Move to Vanguard…no issues.

While I would expect Vanguard to be one of the financial institutions least likely to abandon customers for strictly financial reasons (because they are owned by their customers), they are subject to the same increased enforcement pressure by the US government as all the other financial institutions are. They appear to be holding out so far, but if the government ratchets up the pressure they won't be able to do that for long. I never thought I'd need to worry about this, but the prudent thing to do at this point would be to start investigating moving my US investments off-shore should I no longer be able to keep them in the US.

[Jingthing]

Honestly, I'm overwhelmed and appreciate of the response so far. Much more than I expected.

I had just written a long post and it was wiped out in a server issue (remember next time to copy such posts before posting action) so that's lost.

I don't have the focus right now to deal with all the replies, but I hope to get back to them, and I will have more questions which I think some of you can help with, and hopefully others.

I will say these things:

My research has indicated there is nothing illegal to present yourself as a U.S. resident to these firms when you're not, and you can take any actions any U.S. resident can UNLESS/UNTIL you may be smoked out as an expat.

If you openly come out to firms as an expat, game over ... if they are among most of the major firms avoiding expats, they would have little choice but to effect their policies unless you have a very large account (with some firms).

Which I think is important because it seems to me to give an OPPORTUNITY to take proactive action to be better prepared IF smoked out.

I realize some people say, never a problem for them, but I would suggest don't be too smug. Some of these firms are actively looking for red flags, and future expat roadblocks/traps could hit you later.

More detail later. Thanks again for the responses!

[Boon Mee]

issues ?

If they determine you're living abroad, they freeze your buying and selling. Yes. Issues.

Old news. Been like this since the Patriot Act was enacted

You wanna have a Brokerage Account with any of the above mentioned?

Gotta reside in the USA!

Edited May 31, 2016 by Boon Mee

[Jingthing]

issues ?

If they determine you're living abroad, they freeze your buying and selling. Yes. Issues.

Old news. Been like this since the Patriot Act was enacted

You wanna have a Brokerage Account with any of the above mentioned?

Gotta reside in the USA!

Not exactly, BM.

They gotta THINK you reside in the USA and you have to avoid red flags that make them think you don't.

That faking out can get more challenging over time depending on the firm's policies and your personal situation/tactics/history with the firm.

I also reject that this is really old news.

The changes that brought this about are dated, but the REALITIES of dealing with this for current and future expats are happening NOW.

As we've read many expats take pains to fake out these firms ... that's an ongoing hassle especially realizing the tactics they employ to "know your customer" have a trend to get more and more aggressive.

I think the people in the best place now are people planning to expatriate. They can know these issues coming in with the kind of knowledge that longer term expats never had ... because the rules changed on them in the middle of the game.

Edited May 31, 2016 by Jingthing

[CaptHaddock]

If the brokerage firms become really committed to divesting themselves of expat clients or if they are compelled to do so by Congress, then they will certainly be able to identify us. Currently, they only ever require US address verification when opening an account, but it doesn't have to be that way. If they are allowed access to tax and voting rolls, IRS addresses, driver's license databases, they will be able to lower the cost of verification enough to make it continuous. Just as when video cameras got cheap then video surveillance become ubiquitous, so residence verification can easily become too cheap not to incorporate into routine account maintenance.

[Boon Mee]

issues ?

If they determine you're living abroad, they freeze your buying and selling. Yes. Issues.

Old news. Been like this since the Patriot Act was enacted

You wanna have a Brokerage Account with any of the above mentioned?

Gotta reside in the USA!

Not exactly, BM.

They gotta THINK you reside in the USA and you have to avoid red flags that make them think you don't.

That faking out can get more challenging over time depending on the firm's policies and your personal situation/tactics/history with the firm.

I also reject that this is really old news.

The changes that brought this about are dated, but the REALITIES of dealing with this for current and future expats are happening NOW.

As we've read many expats take pains to fake out these firms ... that's an ongoing hassle especially realizing the tactics they employ to "know your customer" have a trend to get more and more aggressive.

I think the people in the best place now are people planning to expatriate. They can know these issues coming in with the kind of knowledge that longer term expats never had ... because the rules changed on them in the middle of the game.

Well, as of 7 years ago the policies at Fidelity were such (and they haven't changed) that having an overseas address precluded you from trading. Your account was 'frozen'.

<deleted> Patriot Act!

Edited May 31, 2016 by Boon Mee

[Jingthing]

We're not talking about a non-U.S. address. Yes, true, you can't do that. That's game over right away except for something like Schwab International.

The larger issue is what U.S. expats have been doing for so long, using U.S. addresses for their U.S. financial accounts and how that has become a problem, if discovered.

[Jingthing]

If the brokerage firms become really committed to divesting themselves of expat clients or if they are compelled to do so by Congress, then they will certainly be able to identify us. Currently, they only ever require US address verification when opening an account, but it doesn't have to be that way. If they are allowed access to tax and voting rolls, IRS addresses, driver's license databases, they will be able to lower the cost of verification enough to make it continuous. Just as when video cameras got cheap then video surveillance become ubiquitous, so residence verification can easily become too cheap not to incorporate into routine account maintenance.

Very true. Do they think they ARE allowed access to such databases?

Edited May 31, 2016 by Jingthing