March 20, 2014 – Fidelity Investments has decided to stop servicing retirement accounts that are owned by American citizens living overseas, otherwise known as expats. The move comes amidst similar moves by more than half a dozen IRA custodians, and analysts believe the policy change is partially due to newly enacted laws and partially based on the lack of profit margin expats tend to provide their IRA and 401(k) custodians.
“Many expats have 401(k) plans with previous employers that they never touch, so the custodian never has a chance to make money from service and transaction fees,” said GoldCoin.net analyst Ken Braun. “Even expats with self-directed IRAs tend to make fewer trades than individuals living in the United States.”
Recently enacted “know your customer” laws have made it more difficult, but not impossible, for IRA custodians to work with expats. “When a client doesn’t use a verifiable U.S. mailing address it could present some problems for the custodian, but there is a lot of gray area there,” said Braun. “IRA custodians can service expats if they want to, and that is evidenced by the $500,000 rule some custodians have implemented.”
The $500,000 rule mentioned by Braun is a reference to the threshold some custodians have implemented as the minimum account balance an expat should have within their IRA in order for the custodian to manage the account. Clients with less than a half million dollars in their IRA are being forced to look elsewhere for an IRA custodian.
Equity Institutional has welcomed expats with open arms as they are shunned by the likes of Fidelity, Scottrade and Vanguard. Equity offers traditional investment vehicles as well as precious metals and real estate. To inquire about a IRA or 401(k) rollover call 1-800-425-5672 today or scroll to the bottom of this page and request your free retirement account rollover guide, compliments of GoldCoin.net.
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