It’s a US Treasury, IRS and FATCA approved path which has been created to open an offshore account which has unlimited rights to global investment choices. Your US Trustee maintains your reporting and US Tax Compliance. There is no need for you to report to the IRS as the Trustee reports annually on your behalf however there is no tax payable on growth as with a standard US based IRA.
We understand you are concerned with moving your money to an offshore account. In fact in our view there is less risk involved in moving it offshore as there is more regulatory control involved in the offshore transaction to protect your funds. The US Trustee is regulated in the USA and the investment account provider is regulated in the EU as well as the UK. Also your capital is 100% protected in the unlikely event of potential corporate failure because your funds are completely segregated. Your funds would pass from your current IRA to overseas financial service provider collection bank account with HSBC London onto the investments you wish to purchase. Therefore the risk lies in the investments you purchase just as it currently does with your Fidelity, Vanguard, Charles Schwab, Ameritrade or other account.
The benefits are you can diversify your investments worldwide and are not limited to investing in the USA or US Dollar. So you have choice over investment asset class, type and market. For example the “Offshore” mutual funds of Charles Schwab, Vanguard, Fidelity etc. are not available to USA persons. The “Offshore” funds have minimum or zero tax on capital gains, income, profits and dividends as they are typically situated in tax free countries and the income of the fund can be rolled over inside the fund which allows it to outperform a US domiciled fund and gain a higher yield. This also gives them the opportunity to charge lesser fees than US domiciled funds. US domiciled fund rules require distribution of 98% of the funds income annually and pay US tax so their yields are lower.
It has been proven time and again over the last few decades that globally diversified and non-correlated investment portfolios carry significantly less long term risk than those concentrated in one market.It is also important to note that this Offshore IRA is also registered in international retirement plan law so you are protected by Common, Civil and Sharia law internationally as well as being FATCA, IRS and US Tax Law compliant. You would also be exempt from reporting to foreign governments on gains and accumulations which may be relevant if you move to a country that requires worldwide reporting of income and has a double tax agreement with the USA.
One final point we should mention by way of protecting your funds is that by moving your money to an Offshore IRA you protect yourself from lawsuits in the US. I am not saying this will happen but 90% of the worlds lawsuits are filed in the USA. Although States have laws that prevent access to an IRA in a law suit those laws do not protect the income from an IRA from being claimed. If for example if you have a car accident in the US and someone sues you they cannot legally access an Offshore IRA. It can also protect you from civil forfeiture and divorce courts (not that you are married but you never know in the future).