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--- retirement_accounts [2025/11/01 06:52] – [Retirement Accounts] jhagstrand
+++ retirement_accounts [2026/03/01 04:06] (current) – jhagstrand
@@ Line 1: / Line 1: @@
 ======Retirement Accounts======
+[[American Expat Retiree Financials | contents]]
 There are two kinds of retirement account:
@@ Line 19: / Line 21: @@
 Typically a worker and/or his employer make contributions to the plan while the worker is working.
 When the worker retires, he begins to make withdrawals.
+Immediately upon leaving an employer, the employee is advised to transfer any pension plan to a self-directed IRA.
 ===== Retirement Withdrawal Strategy =====
@@ Line 24: / Line 28: @@
 aka retirement distribution strategy, retirement income strategy, retirement drawdown strategy.
-Many strategies I read about are designed to provide income to the retiree.\\
+Some goals of a withdrawal strategy can include:
-My strategy is designed to continue to grow the fund, and give it to my heirs tax-free.
-Taking explicit RMD amounts results in excessive tax payments. I should have started earlier.
+  * provide income to the retiree
+  * maximize growth of the fund
+  * minimize total lifetime tax payments
+  * hold for heirs
+Taking explicit RMD amounts results in excessive tax payments.
 **Vanguard: a guide to Retirement Withdrawal Strategies**\\
 https://investor.vanguard.com/investor-resources-education/article/retirement-withdrawal-strategies
-  * dollar plus inflation - in the first year take a fixed amount, sometimes 4% of the total portfolio, “the 4% rule”, then increase that amount each year to match inflation\\
+  * dollar plus inflation - in the first year take a fixed amount, sometimes 4% of the total portfolio, “the 4% rule”, then increase that amount each year to match inflation
+  * percentage of portfolio
+  * fixed dollar
+  * fixed percentage
+  * withdrawal buckets
+  * dynamic spending - hybrid of dollar plus inflation and percentage of portfolio
-  * percentage of portfolio\\
+**Kiplinger: 10 Ways Retirees Can Manage Income Distribution**\\
+https://www.kiplinger.com/retirement/ways-retirees-can-manage-income-distribution\\
+three types of accounts:
-  * fixed dollar\\
+  * tax-deferred - 401K, IRA
+  * taxable - normal brokerage account
+  * tax-free - Roth IRA
-  * fixed percentage\\
+====== RMD and Roth Conversion ======
-  * withdrawal buckets\\
+RMD is a scam.
-  * dynamic spending - hybrid of dollar plus inflation and percentage of portfolio
+Roth Conversion is the antidote.
-**Kiplinger: 10 Ways Retirees Can Manage Income Distribution**\\
+IRAs can be combined. 401k must be taken individually.
-https://www.kiplinger.com/retirement/ways-retirees-can-manage-income-distribution\\
+balance for the previous year, divided by the distribution period
-three types of accounts:
+use Table III. Uniform Distribution Period - this is used by the retiree/owner of the account
+begins the for the tax year in which you turn 72, distribution year when you turn 73. The first year only, you get an extra four months to take the distribution.
-  * tax-deferred - 401K, IRA\\
+Take your first RMD in the year you turn 73 (2025), due before 31 Dec 2025.
+Based on the balance at the end of the previous tax year (2024).
-  * taxable - normal brokerage account\\
-  * tax-free - Roth IRA
-=== Roth Conversion ===
+====== Roth Conversion ======
 Any amount can be withdrawn from an IRA and converted to a Roth IRA.\\
@@ Line 126: / Line 143: @@
 direct - check goes from old broker to new broker
-There are two ways to transfer assets directly from the old broker to the new broker without taking\\
+There are two ways to transfer assets directly from the old broker to the new broker without taking possession and without risking a potential tax liability.
-possession and without risking a potential tax liability.
   * Trustee-to-trustee Transfer - Assets and cash transferred directly from broker to broker. The sending broker to the receiving broker. The resigning broker to the ? broker. The paperwork is initiated by the receiving broker.
@@ Line 146: / Line 162: @@
 This is used when the giving broker does not participate in ACAT and is otherwise being uncooperative about giving up your shit.
-  * Old broker liquidates the old IRA, sends the proceeds to the owner, after withholding 20% for income tax.\\
+  * Old broker liquidates the old IRA, sends the proceeds to the owner, after withholding 20% for income tax.
+  * The old broker will issue a 1099-R making this a normal distribution.
-  * The old broker will issue a 1099-R making this a normal distribution.\\
+  * Owner receives the check and deposits it into his new IRA.
+  * Owner then deposits some of his own money into the new IRA to make up for the withholding amount.
-  * Owner receives the check and deposits it into his new IRA.\\
+  * The new broker must recognize both of these deposits as an indirect rollover, and report them on Form 5498 as “rollover contribution”.
+  * Only one of this type of rollover is allowed in any 12-month period, so there is no confusion about which contribution goes with which distribution.
-  * Owner then deposits some of his own money into the new IRA to make up for the withholding amount.\\
-  * The new broker must recognize both of these deposits as an indirect rollover, and report them on Form 5498 as “rollover contribution”.\\
-  * Only one of this type of rollover is allowed in any 12-month period, so there is no confusion about which contribution goes with which distribution.\\
-  *
 === Transfer to another Custodian ===
@@ Line 166: / Line 175: @@
   * Direct Trustee-to-Trustee Transfer:
     * The funds move directly from one custodian (E*TRADE) to another (Schwab International) without you taking possession of the money. This is the preferred method because:
-      * It’s not considered a withdrawal or rollover.\\
+      * It’s not considered a withdrawal or rollover.
+      * There are no tax implications or penalties.
-      * There are no tax implications or penalties.\\
+      * There’s no limit on how many times you can do this.
+    * The 5-year holding period remains intact, as it’s tied to your first Roth contribution or conversion, not the custodian.
-      * There’s no limit on how many times you can do this.\\
-    * The 5-year holding period remains intact, as it’s tied to your first Roth contribution or conversion, not the custodian.\\
   * Rollover (Indirect Transfer):
-    * The custodian sends you a check or deposit, and you have 60 days to deposit the full amount into the new Roth IRA at Schwab International.\\
+    * The custodian sends you a check or deposit, and you have 60 days to deposit the full amount into the new Roth IRA at Schwab International.
+    * If you don’t complete it within 60 days, it’s treated as a withdrawal, potentially triggering taxes on earnings and a 10% penalty if you’re under 59½ and don’t meet an exception.
-    * If you don’t complete it within 60 days, it’s treated as a withdrawal, potentially triggering taxes on earnings and a 10% penalty if you’re under 59½ and don’t meet an exception.\\
+    * You’re limited to one rollover per 12-month period (across all IRAs), though this rule doesn’t apply to direct transfers.
-    * You’re limited to one rollover per 12-month period (across all IRAs), though this rule doesn’t apply to direct transfers.\\
     * This is less common for custodian switches due to the risk and paperwork.
 ===== Rollover per IRS =====
-=== IRS: Topic No.&nbsp;413 Rollovers From Retirement Plans ===
+=== IRS: Topic No. 413 Rollovers From Retirement Plans ===
 https://www.irs.gov/taxtopics/tc413
@@ Line 201: / Line 203: @@
 https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions
-<ul>
+  * How do I complete a rollover:
-<li><p>How do I complete a rollover:</p>
+    - Direct rollover – If you’re getting a distribution from a retirement plan, you can ask your plan administrator to make the payment directly to another retirement plan or to an IRA. Contact your plan administrator for instructions. The administrator may issue your distribution in the form of a check made payable to your new account. No taxes will be withheld from your transfer amount.
-<p>1. Direct rollover – If you’re getting a distribution from a retirement plan, you can ask your plan administrator to make the payment directly to another retirement plan or to an IRA. Contact your plan administrator for instructions. The administrator may issue your distribution in the form of a check made payable to your new account. No taxes will be withheld from your transfer amount.</p>
+    - Trustee-to-trustee transfer – If you’re getting a distribution from an IRA, you can ask the financial institution holding your IRA to make the payment directly from your IRA to another IRA or to a retirement plan. No taxes will be withheld from your transfer amount.
-<p>2. Trustee-to-trustee transfer – If you’re getting a distribution from an IRA, you can ask the financial institution holding your IRA to make the payment directly from your IRA to another IRA or to a retirement plan. No taxes will be withheld from your transfer amount.</p>
+    - 60-day rollover – If a distribution from an IRA or a retirement plan is paid directly to you, you can deposit all or a portion of it in an IRA or a retirement plan within 60 days. Taxes will be withheld from a distribution from a retirement plan (see below), so you’ll have to use other funds to roll over the full amount of the distribution.
-<p>3. 60-day rollover – If a distribution from an IRA or a retirement plan is paid directly to you, you can deposit all or a portion of it in an IRA or a retirement plan within 60 days. Taxes will be withheld from a distribution from a retirement plan (see below), so you’ll have to use other funds to roll over the full amount of the distribution.</p></li>
+  * Beginning after January 1, 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own.
-<li>Beginning after January 1, 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own.\\
+  * The one-per year limit does not apply to:
-</li>
+    * rollovers from traditional IRAs to Roth IRAs (conversions)
-<li>The one-per year limit does not apply to:
+    * trustee-to-trustee transfers to another IRA
-<ul>
+    * IRA-to-plan rollovers
-<li>rollovers from traditional IRAs to Roth IRAs (conversions)\\
+    * plan-to-IRA rollovers
-</li>
+    * plan-to-plan rollovers
-<li>trustee-to-trustee transfers to another IRA\\
+  * Direct transfers of IRA money are not limited.
-</li>
+    * This change won’t affect your ability to transfer funds from one IRA trustee directly to another, because this type of transfer isn’t a rollover (Revenue Ruling 78-406, 1978-2 C.B. 157). The one-rollover-per-year rule of Internal Revenue Code Section 408(d)(3)(B) applies only to rollovers.
-<li>IRA-to-plan rollovers\\
+  * IRAs: An IRA distribution paid to you is subject to 10% withholding unless you elect out of withholding or choose to have a different amount withheld. You can avoid withholding taxes if you choose to do a trustee-to-trustee transfer to another IRA.
-</li>
+  * Retirement plans: A retirement plan distribution paid to you is subject to mandatory withholding of 20%, even if you intend to roll it over later. Withholding does not apply if you roll over the amount directly to another retirement plan or to an IRA. A distribution sent to you in the form of a check payable to the receiving plan or IRA is not subject to withholding.
-<li>plan-to-IRA rollovers\\
-</li>
-<li>plan-to-plan rollovers\\
-</li></ul>
-</li>
-<li>Direct transfers of IRA money are not limited.
-<ul>
-<li>This change won’t affect your ability to transfer funds from one IRA trustee directly to another, because this type of transfer isn’t a rollover (Revenue Ruling 78-406, 1978-2 C.B. 157). The one-rollover-per-year rule of Internal Revenue Code Section 408(d)(3)(B) applies only to rollovers.\\
-</li></ul>
-</li>
-<li>IRAs: An IRA distribution paid to you is subject to 10% withholding unless you elect out of withholding or choose to have a different amount withheld. You can avoid withholding taxes if you choose to do a trustee-to-trustee transfer to another IRA.\\
-</li>
-<li><p>Retirement plans: A retirement plan distribution paid to you is subject to mandatory withholding of 20%, even if you intend to roll it over later. Withholding does not apply if you roll over the amount directly to another retirement plan or to an IRA. A distribution sent to you in the form of a check payable to the receiving plan or IRA is not subject to withholding.</p></li></ul>
 === IRS: Retirement plan and IRA required minimum distributions FAQs ===
@@ Line 287: / Line 277: @@
 https://irahelp.com/slottreport/7-things-you-need-know-about-once-year-rollover-rule/
-  - The once-per-year rule applies in aggregate to IRAs and Roth IRAs.\\
+  - The once-per-year rule applies in aggregate to IRAs and Roth IRAs.
+  - The rule does not apply on a calendar basis.
-  - The rule does not apply on a calendar basis.\\
+  - The rule does not apply to Roth conversions.
+  - The rule also does not apply to rollovers from employer plans…
-  - The rule does not apply to Roth conversions.\\
+  - Direct transfers avoid the rule.
+  - Checks made out to a receiving IRA qualify as trustee-to-trustee transfers.
-  - The rule also does not apply to rollovers from employer plans…\\
-  - Direct transfers avoid the rule.\\
-  - Checks made out to a receiving IRA qualify as trustee-to-trustee transfers.\\
   - Violating the once-per-year rule has serious consequences. Don’t mess around with the once-per-year rollover rule. The consequences are too severe.
@@ Line 358: / Line 342: @@
   * Form 5498 is not issued by the custodian until May of the following year. This is because normal contributions can be made for a given tax year up until 15 April of the following year. This means an owner has to prepare and file his taxes before he has received the Form 5498, meaning he must keep his own records.
-—-\\
+===Indirect Rollover documentation Per Grok===
-Indirect Rollover documentation\\
-Per Grok
 The old IRA custodian reports the distribution to the IRS using Form 1099-R. This form indicates the amount distributed and uses a specific code (e.g., Code G for a rollover) to show it’s intended as a rollover. However, for indirect rollovers, the custodian may not know the funds were rolled over, so the distribution might initially be coded as taxable (e.g., Code 1 for early distribution).
@@ Line 415: / Line 397: @@
 ====== Expats and KYC ======
-The transfer or rollover becomes especially important when an expat finds his IRA account frozen or closed because of [[https://docs.google.com/document/d/1sVQLilYeMNg3VUb3W89dxkSjIDqaVTW_g1TG1DuJbKE/edit?tab=t.0#heading=h.7oc6x4rfwhq5|Know Your Customer]] (KYC) rules. In the worst case, when the old custodian believes his customer has left the US, the account is closed and a check sent to the customer’s American address on file. In this event, the customer must open a new IRA account at Interactive Brokers or Charles Schwab International, and deposit the check within 60 days.
+The transfer or rollover becomes especially important when an expat finds his IRA account frozen or closed because of [[Know Your Customer]] concerns.  For example, when a custodian considers his customer to have left the USA, the customer may close the customer's account and send a check for the proceeds to his American address on file. In this event, the customer must open a new IRA account at Interactive Brokers or Charles Schwab International, and deposit the check within 60 days to effect an indirect rollover.  If he gets delayed and misses the 60-day timeframe, the transaction will be treated as a taxable distribution of the full amount.
 I have no data from anyone who has experienced this, but the following articles describe the phenomenon.
-=== H&amp;R Block: What are the rules on IRAs for US citizens living abroad? ===
+===Sources===
+**H&R Block: What are the rules on IRAs for US citizens living abroad?**\\
 Oct 2022\\
 https://www.hrblock.com/expat-tax-preparation/resource-center/income/retirement/what-are-the-rules-on-iras-for-u-s-citizens-living-abroad/?srsltid=AfmBOor6uuYvzcwIsCEY9WlBwXJqgQgGM49DHmhLPYloqiDPDrmJqHUj\\
 Yes, a U.S. citizen living abroad can have both a traditional and/or Roth IRA. The restrictions only come with making contributions—so, if you had an existing IRA before you moved abroad, you don’t have to get rid of it or transfer assets, but you may not be able to add to it while you’re overseas.
-=== Harrison Brook: Your IRA in the US is closing? How to quickly rollover as an expat. ===
+**Harrison Brook: Your IRA in the US is closing? How to quickly rollover as an expat.**\\
 May 2023, by Ryan Frost\\
 https://harrisonbrook.com/your-ira-in-the-us-is-closing-how-to-quickly-roll-over-as-an-expat/\\
 When these firms discover a customer no longer physically resides in the United States, they may freeze their brokerage accounts or force American expats to liquidate their investment holdings.
-=== Harrison Brook: Can American Expats keep an old address on their US brokerage accounts? ===
+**Harrison Brook: Can American Expats keep an old address on their US brokerage accounts?**\\
 th March 2024 by Ryan Frost\\
 https://harrisonbrook.com/can-american-expats-keep-an-old-address-on-their-us-brokerage-accounts/\\
@@ Line 439: / Line 420: @@
 As it is not illegal, should you disclose your current residential address to your investment institutions?
-=== Investments For Expats (IFE): What happens if your IRA account closes down as a US expat? ===
+**Investments For Expats (IFE): What happens if your IRA account closes down as a US expat?**\\
 byline Henry Temple-Baxter\\
 https://investmentsforexpats.com/what-happens-if-your-ira-account-closes-down-as-u-s-expat/\\
 [This page is largely a duplicate of Ryan Frost’s article above.]
-=== Greenback: Moving Your Retirement Account Overseas ===
+**Greenback: Moving Your Retirement Account Overseas**\\
 Jan 2025\\
 https://www.greenbacktaxservices.com/knowledge-center/expat-retirement-planning/\\
 First, some US retirement plan administrators are unwilling to work with a person who no longer lives in the United States. In some cases, they may freeze the 401(k) (in terms of not accepting new contributions to the 401(k)), and in other cases, they may even close the 401(k). Thus, you must retain a US retirement plan administrator who can work with US expats.
-=== Chase Buchanan: US-Connected Persons ===
+**Chase Buchanan: US-Connected Persons**\\
 no date, no author byline\\
 https://chasebuchanan.com/services/us-connected-persons/\\
 Professional advice is even more important for US expats, given that a substantial proportion of banks and financial institutions based in America will not serve clients living abroad.
-=== The Wealth Genesis: Managing Your US IRA As An Expat ===
+** The Wealth Genesis: Managing Your US IRA As An Expat**\\
 no date, no author byline\\
 https://www.thewealthgenesis.com/insights/managing-your-us-ira-as-an-expat\\