Vanguard IRA Services has evidently closed the door on American expatriates with retirement accounts valued at less than $500,000, according to a recent International Advisor article. Vanguard, along with eight other IRA custodians, including Scottrade, Fidelity, T.D. Ameritrade, Morgan Stanley and Merrill Lynch, is no longer accepting applications for self-directed IRA plans when the IRA owner is an expat (a U.S. citizen living abroad) and when the account in question is valued at $500,000 or less.
It is unclear whether Vanguard is forcing current expat IRA clients to move elsewhere, as are some of the aforementioned custodians, or whether Vanguard is only denying expats incoming or new IRAs. What’s certain is that U.S. expats the world over are scrambling to find an IRA custodian that is willing to manage expat retirement accounts.
Lawyers for these IRA custodians have stated that recently changed “know your customer” laws has made it more difficult to service accounts owned by Americans if they do not have a valid U.S. mailing address. Others have said that the $500,000 minimum account balance is proof that the real reason behind the policy change has to do with profits.
“Expats tend to leave their accounts dormant while they are abroad, so the custodian isn’t able to charge any service fees or transaction fees,” said Certified Gold Exchange analyst Dan Ross. “Expats with large accounts are more likely to generate fees but an expat with an IRA or 401(k) that is worth a few thousand dollars probably isn’t very profitable for Vanguard.”
Ross believes that expats will flock to alternative IRA custodians in the future as other traditional custodians continue to black-ball overseas IRA owners. “We’re seeing a lot of expats shift funds to Equity Institutional and GoldStar Trust,” Ross said. “Equity Institutional offers expats a wide variety of mainstream investments as well as LLC IRA plans, real estate IRAs and gold-backed retirement accounts.”
Expats and other IRA owners who would like more information on Equity Institutional IRA products and services should call 1-800-300-0715 for a complimentary gold IRA guide, a no-obligation portfolio evaluation and free assistance in completing the rollover paperwork.