US Retirement Planning

Living as dual citizen or expat in the United States brings many potential personal, cultural and financial benefits. However, it can also have considerable tax, inheritance, pensions and wealth management implications, particularly if you earn in excess of $100,000 a year or you are planning your pension and retirement savings.

Blacktower (US) LLC is fully licensed and regulated by the SEC and has over 30 years’ experience in the offshore and cross border expat market. We are excellently placed to manage clients’ US-based assets, including 401ks, IRAs and 529 education plans.

Our aim is to offer robust and conservative long-term growth, aligned with careful planning and management from start to finish. We welcome expats specifically, by offering a complete holistic wealth management approach.

Qualified Retirement Planning

Wherever you work in the world, ensuring that you have retirement plans in place is an essential part of providing for the interests of you and your family in the future.

However, if you are a foreign national in the US, or you have dual citizenship, there are some complex issues to consider regarding your retirement plans, particularly if you are not yet clear about where you will be residing come the time of retirement.

Uncertainty in this regard should not dissuade you from seeking advice and taking action. Most investors, including those who plan to one day return to their country of origin, should be able to find both long-term reward and short-term tax benefit by making contributions to a retirement plan while living and working in the United States.

Potentially beneficial qualified retirement plans include the following:

• IRAs—Expats up to the age of 50 can make a maximum contribution of $5,500 per annum or up to $6,500 p.a if they are over 50.
• 401ks—Suitable for those working for a US parent company. There is an employee limit of $19,500 p.a. However, members aged over 50 can add a further $6,500
• 403b—Sometimes referred to as the “non-profit” version of the 401k, the 403b may be suitable for certain retirement savers working in particular jobs.
• Defined benefit plans—Different plans are available. Each may be structured differently and each may limit contributions at different thresholds. Much will depend on your employer and your financial situation. Financial advice is recommended.

Consider the long-term

If you are planning to reside in your country of origin or any other non US location during your retirement, you should plan for this eventuality. Your tax obligations will depend on whether you are US tax resident or a non-resident alien, as well as the way the country of your eventual residence treats US retirement plan income.

More than 70 countries have tax treaties with the United States. These may help the retiree avoid or reduce US withholding tax of 30% which is applicable for non-resident aliens and means they can be taxed accordingly in their country of residence.

Depending on individual circumstances and tax considerations, it may be beneficial to leave the plan in place and to take advantage of the diversified investment options provided by US IRA or 401k accounts. Whatever the case it is unlikely to be a good idea to make withdrawals from an account before you reach the age of 59 ½ as withdrawals before this stage attract income tax as well as 10% excise “penalty” tax.

Contact Blacktower (US) LLC today

Retirement planning is one of the most important yet complex and challenging areas of wealth management for expats living and working in the United States. Choosing and enacting the right strategy takes time, knowledge and expertise.

Blacktower (US) LLC can help make you aware of your responsibilities and options so that your retirement and pension plans are both optimised and comply with the rules of the Internal Revenue Service (IRS). Contact us today for more information.