Offshore IRA – What do you need to know?

People wanting to diversify their assets into foreign jurisdiction are a common phenomenon these days. If you are seeking to do the same, you should know that this is a rewarding decision. However, there are many misconceptions that exist about the way you want to accomplish this. If you want to take control of your hard earned savings then offshore IRA can be a good decision for you. It is better that you take into account key considerations prior to reaching a conclusion about taking your assets overseas.

What should you move?

Firstly, most people usually consider a dollar which has appeared on a bank or a brokerage statement as a dollar kept for retirement savings. However, in reality an IRA can be considered as a completely different pool of money. In order to maintain the tax free aspect of an IRA, also known as tax deferral, it abides by a completely dissimilar set of laws than your after-tax savings. Thus the affable IRS becomes your associate in the IRA funds. You should remember that this partner will not exist in your after-tax savings which will increase your freedom to allocate the funds to others via gifts, trusts or other charitable contributions. You will also be able to invest in whatever you like at any time you prefer. Hence when it comes to moving your assets overseas, there is no single product which is able to accomplish this or both the pools of assets. In order to accomplish the task for the IRA funds, you need an IRA structure that contains a self managed LLC and an offshore trust which can achieve it for any non-IRA assets.

The next consideration you have to make is whether a foreign administrator is required to accomplish your goals. Once again, for funds which are non-IRA it makes a lot more sense to have a direct foreign entity. There are no limitations on investment and no involvement of third parties which is required to approve of the estate plan. The laws of IRA leave room for a weak link. The law of IRS necessitate that an IRA have a US based custodian. You cannot work around this as you need to have a custodian in the US who will be doing the annual reporting to the IRS.