Vanguard USA and moving to another country...

[SavingWithBabies]

I read an interesting thread over at BogleHeads.org about issues that USA residents with Vanguard accounts have when moving overseas. The issue is Vanguard doesn't want to deal with those who have non-USA addresses. Apparently, it's not a problem until you decide to say create a Roth IRA account or some new account within your parent Vanguard account and then you will have problems due to a non-USA address.

The workarounds suggested in the thread are:

• get a USA address from a mail service

• use Fidelity or another broker that does not have the USA address requirement

• buy Vanguard ETFs through another broker instead of directly (apparently, no Admiral/lowest cost options via ETF but that is probably not a big deal)

One nuance raised with the first option is that it may complicate your tax situation if your intentions are to be a non-resident of the USA. Otherwise, this seems fairly straightforward. With tax sheltered accounts like 401k I know I can move them without penalty to another provider. But for taxable accounts, liquidating to move would create a taxable event, right? Or is there a way to move taxable accounts between brokers without a buy-sell?

I left wondering if I should change my future taxable investments to go into an account at a non-USA address friendly broker. It seems like a sensible thing to do if one has moving overseas as a potential path in life. The hassle of doing so seems fairly small for the benefit of avoiding a potential taxable event later on (when, hopefully, there are a lot of gains).

Anyone already gone down this road? What did you do?

[jacob]

You can move [the contents of] taxable accounts between brokers without triggering tax-events. It usually involves a transfer fee <$100. Might be voided if you open a new account. Depends.

If you're a US person or a US citizen and you move your accounts to a a non-US address, you'll get the pleasure of filing FBAR (formerly TDF90221) if accounts exceed $10k in total + various other extended IRS forms (due to FATCA) detailing all foreign income if accounts exceed $100k total (married). FATCA et. al has made bureaucratically "annoying" for financial companies to deal with foreign persons and foreign bank accounts (e.g. good luck if you're an American trying to open a bank account elsewhere). This whole US address requirement is part of that. It's just an extra cost for companies to deal with the added paperwork.

In terms of international banking, I've looked into it a bit and HSBC (expat) seems to come out on top (for what I'd want anyway). You can open an account online. The money is IIRC held on the island of Jersey. See e.g. https://www.expat.hsbc.com/1/2/hsbc-exp ... aredealing .. you can buy US ETFs. (However, doing this would trigger the tax-reporting above.)

[SavingWithBabies]

@jacob Ah! Well, that really solves all my concerns then (that I can move a taxable account without a taxable-event). That is great news and I think I'll not change anything due to that.

I had that faulty impression due to how 401k rollovers work. I've always had it where they sell it, mail you or your provider a check and then you chose how to invest the funds at the new provider. But now it makes sense that is probably due to the funds being provider-specific so they can't transfer like say a stock.

[The Old Man]

Essential Reading:

Why US Brokerage Accounts of American Expats are Being Closed (2015)
http://ThunFinancial.com/us-brokerage-a ... osed-2015/

American Expats Scramble to Keep U.S. Investment Accounts
http://blogs.wsj.com/expat/2015/09/20/a ... -accounts/

[SavingWithBabies]

Interesting... One of the more recent posts (2017) on that BogleHeads recommended Schwab International:

http://international.schwab.com/public/ ... intro.html

On that page, they have a list of countries of residence. So in light of the links from The Old Man, it's good to know which providers/brokers plan on catering to expats. Later in the thread too it mentioned that some people with non-USA address at Fidelity were having their accounts closed.

[The Old Man]

Its also worthwhile to know that Vanguard also caters to non-USA residents.
https://global.vanguard.com

[SavingWithBabies]

@OM Maybe it's the same with Schwab but if I click through to South America and then the contact page here:

https://www.vanguardsouthamerica.com/sa ... contact-us

It says:

Vanguard provides services to investors around the world and offers an extensive lineup of investment products globally. In South America, many of our investment products may currently be available to institutional investors, however, we do not have products publicly available for individual investors. If you are a personal investor enquiring on your own behalf, please be aware that we do not service direct individual investors.

But hopefully some of the countries are more than just institutional.

Your point stands though -- whoever is in the situation of needing this should do more research of course.