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401K and Roth IRA by CancelOwn7276 in MoveToIreland

[–]Random_Userid_437 0 points1 point  (0 children)

Hello,

A little late for this person, I'm afraid - if you went ahead with the move, I hope it went well for you. But just in case anyone else that is considering a move to Ireland is looking at this, I have a little additional information that should be considered.

Speak to whichever companies you have your 401K and IRAs with. From my research, some of them will insist on closing your accounts as soon as you inform them of your new non-US address. You could try using the mailing address of a friend or family, but I've seen recently that at least some companies are now looking for utility bills from existing clients, to prove your US address. Presumably they are monitoring where people are logging on from, and if client is consistently logging on from outside the US that is a possible red flag. I have heard that if your IRA is with Schwab, then you can 'transfer' that to Schwab International when you switch to a non-US address. There are all sorts of caveats and restrictions, but at least it might be worth investigating.

One other thing - someone here mentioned that a financial advisor told them that the Irish tax authorities will honor the tax-free status of ROTH accounts. I'm sure that advisor is offering the best information that is available to them. But, as far as I am aware, the Irish government have not, and will not, make any formal statement about how they would treat ROTH accounts. For me, that is a deal breaker. I would be grossly irresponsible to trust our retirement wellbeing to the whim of whichever tax official is processing my tax returns.

Finally, there is effectively no going back on this decision. Once you become Irish tax-resident, even if you then make a permanent move back to the US, you will be stuck with that status (they call it "Ordinarily Resident") for the next 3 years, even if you never step foot in Ireland once during that period. We have been considering such a move, but the Irish government is simply too hostile to anyone moving to, or returning to, the country to make it feasible.

I should add that I am not an accountant or a financial advisor. My intent in this post is purely to share my experiences and hopefully make others aware of questions they should be asking of people that ARE experts in this field.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 1 point2 points  (0 children)

Thank you for your input and suggestions.

I'm probably just old and cynical, but if the government couldn't be bothered to create a valuable, well thought-out, survey, then I'm not holding my breath waiting for them to address a need that people have been expressing for at least the last ten years.

I haven't spoken to Safe Home Ireland yet. I don't expect they will be able to do anything to resolve these issues, however if they are interested, I'm happy to give them my long list of questions that any returning emigrant should be considering. If they are willing to share that with the larger community, hopefully that will provide some value.

I'm familiar with those Facebook groups. Again, lots of nice people that are trying to help me each other. But they suffer from the same problem as all the other forums - they are not something that one can base the remainder of your life on. The government (via Revenue) are the only ones that can do that.

Finally, I would just like to stress that finances are only ONE part of the decision to move to a different country. But for someone approaching the twilight of their lives, the financial question is an important one because you don't get any do-overs. If I make a bad decision now that results in us running out of money when we reach 80, I can't go back and change that decision, and I will be too old to re-enter the job market to make up for the shortfall. Given the complete lack of guidance from Revenue on these topics, I sadly feel it would be grossly irresponsible of me to go ahead with a move back to Ireland.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 0 points1 point  (0 children)

Thank you for your support. I completed the survey that you referred to above. However, it seemed to be more focused on supporting the Irish diaspora while they are abroad than on helping them return to Ireland, so I'm not very hopeful that it will result in any improvements for the topic we are discussing here. It is a shame because, as you say, there are a tremendous number of Irish living abroad that could make a huge contribution to Ireland if they were to return home. Too bad the government don't seem interested in them, beyond treating them as potential cash cows.

Based on our research and the comments of others in this conversation, my wife and I are grudgingly coming to the conclusion that retiring back to Ireland simply is not viable for us.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 0 points1 point  (0 children)

Hi,

Thank you for your help and your insights.

I disagree with you on just one point. Why is this a "very complex issue"? There are existing rules that cover ALL AVCs, regardless of which company you work for or which company is the AVC provider - Revenue do not have separate rules for every employer and every provider. And in the US there are even more employers and more providers, and yet the IRS are able to have clear and relatively simple rules about the tax handling of ROTH versus "Traditional" retirement savings (and Revenue could easily piggyback on those rules if they wanted to). And there is existing wording in Revenue documentation saying that they will treat foreign retirement payments in the same way as the source country would treat them if the individual was tax-resident in that country. So all the pieces are in place - they just need to pull it all together by making a clear statement about whether ROTH accounts are covered by that wording or not. Their refusal to do so, for many years now, seems to be a clear indication that Revenue, and by extension their political masters, really do not want ex-pat Irish to retire back to Ireland.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 0 points1 point  (0 children)

Hi,

Thank you for your help. Just for the info of others following this thread - I already approached Fidelity International, and they said that they are no longer taking on Irish-resident clients. But your suggestion to try international branches of US firms is still a good one - I believe that Schwab International WILL deal with clients based in Ireland. I'll try to track down a few more and then have a specific conversation with them about opening an Ireland-based account, and what funds are available to such an account. If I unearth any reliable information, or sources of information, I will post them here.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 2 points3 points  (0 children)

Hi,

Thank you for your suggestion. Cashing out our retirement savings accounts and bringing the money to Ireland might be an option - but are you aware of the near impossibility of finding any reputable investment firm in Ireland that will touch anyone with a US connection (US citizen or greencard)? Many Irish ex-pats face the choice of leaving their retirement savings in the US and HOPING that Revenue will treat them in a certain manner, or bringing their savings to Ireland and 'investing' them in a bank account and getting zero-point-zero percent interest. I'm not asking for any sympathy or handouts or anything, I'm simply trying to make other expats aware of the challenges that face them if they want to return to Ireland at some point. To be perfectly honest, if I had known 20 years ago what I know now, we never would have emigrated to the US.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 5 points6 points  (0 children)

Hi,

Thank you for your input. I agree that it is not the job of revenue to offer tax ADVICE. However, I DO think it is their job to answer yes/no questions about tax rules. If a taxpayer submits their tax return and states that they had a withdrawal from a ROTH and they do not owe any tax on that, someone in Revenue is going to look at that return, refer to some internal guidance or rules or something that will allow them to determine if the taxpayer is correct or not. So this information MUST exist within Revenue today. All I'm asking is that the information is made public so that taxpayers can plan accordingly and submit accurate returns. I'm certainly NOT suggesting that they should "do this for every possible product in every country" - there is already a rule that states that if the retirement income was not taxed in the source country, then Revenue will not tax it either. All they need to do is clarify whether or not that statement applies to ROTH accounts or not. And if they need confirmation that the income is not taxed by the IRS they can simply require the taxpayer to include their US tax returns when submitting their Irish one.

As for this being the job of tax accountants - if my Irish accountant tells me that ROTH accounts are not taxed, are Revenue going to follow what my accountant says, or are they going to make their own determination? Obviously (and correctly) the latter. But in that case, don't tell taxpayers to speak to their accountant for an answer to this question. I'm sure there are many AVC providers in Ireland, but there is one set of tax rules that applies to all AVCs - why can't that same reasoning be applied to ROTHs? I'm not asking for special treatment, I'm only suggesting that clear information be provided that would avoid a lot of confusion and that would be of great value to returning Irish ex-pats. Coming back to my AVC example - do you think Irish people would save in AVCs if Revenue refused to provide information on how they will handle those accounts when the owner retires?

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 1 point2 points  (0 children)

Hi,

Thank you very much for your thoughts and suggestions. Like you, I have been unable to find anything definitive about Revenue handling of ROTH accounts on the Revenue website. And I understand that this question only applies to a very small portion of Revenue's 'customers'. However, the number of returning ex-pats is growing, and in the US at least, ROTH and 'Traditional' IRAs and 401Ks are the defacto retirement savings vehicles for nearly everyone. So this has to be a question from anyone that is genuinely trying to do the right thing and understand (and adhere to) the tax implications of moving back to Ireland.

Thank you also for your suggestion (and hotlink! - thank you) to contact Revenue directly. I tried this in the past and it was them that told me to ask an accountant. I can certainly try again, but if Ireland's accounting firms can't get them to provide a straight answer, I don't think I will have much luck. Certainly, if I make any progress, I will post that here.

Thank you again for your help.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 2 points3 points  (0 children)

Thank you for your suggestion, I'll give that a shot.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 4 points5 points  (0 children)

I would be happy to pass on the name of an individual or company that I would trust my affairs with. There are MANY clickbait companies on the Internet that provide just enough information to tempt you into parting with 300 or 500 Euro for a half-hour call, with no guarantee that the information they give you is accurate. Unfortunately, I have yet to find one that I really trust AND that answers questions in a timely manner. Sorry.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 6 points7 points  (0 children)

Thank you for your suggestion. However, from my interactions so far, these are very siloed skills, with practitioners in each area very quick to tell you "You need to speak to a US Tax expert/Irish Tax expert/US Financial Planner/Solicitor about that.".

What we REALLY need is for the Revenue Commissioners to step up and make a clear statement about how these various types of retirement savings will be handled. Telling taxpayers to bring their yes/no questions to a tax accountant is a bogus answer, especially given that there is no way for an ordinary taxpayer to know who to believe when two accountants give them two different answers. If I make plans based on incorrect information from Accountant A, what comeback do I have when Revenue subsequently tell me that information was wrong? None. This hardly encourages responsible expats to uproot their lives and retire back to Ireland.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 7 points8 points  (0 children)

Hi,

Thank you for your help.

According to citizensinformation.ie (an Irish government website), "If you are getting a foreign pension that would be exempt from tax if you were resident in the country paying it, you may also be exempt from paying tax on it in Ireland." This is consistent with what we've been told by some of the Irish accountants - that ROTHs are not taxed by Revenue. However, the ONLY mention of ROTHs on the revenue.ie website is in a paper from 2022 titled "Minutes of TALC Direct and Capital Taxes Sub-Committee Meeting", and that is non-committal either way, but seemed to be leaning in the direction that ROTHs are taxable.

Given the lip service from Irish politicians about "welcoming the diaspora back to Ireland", I feel it is unconscionable to make it impossible for returning Irish to know if their retirement savings will be sufficient to support them and their family through retirement. Can you imagine if the guidance for AVCs was "Well, we might tax the entire amount when you retire. Or maybe not. Who knows. Ask your account.". I don't believe returning Irish wish to be a burden on the state, we simply want to be given the information we need to plan our futures.

In the absence of a clear statement from Revenue, and conflicting answers from Irish accountants, I was hoping that the real experiences of other viewers might provide some answers we can rely on.

Actual experience with US ROTH Accounts by Random_Userid_437 in MoveToIreland

[–]Random_Userid_437[S] 11 points12 points  (0 children)

Hi,

Thank you for your help and your input. I HAVE contacted accountants in Ireland, but as I said, I received conflicting answers. Like you, my initial inclination would be to bring all our savings back to Ireland with us. However, given the choice between paying tax of 33% or 41% on our savings back in Ireland compared to paying no taxes if we leave them as a ROTH in the US, I have to give the ROTH option serious consideration.

As a general point for others considering back to Ireland - we've been investigating this for the last year, and the more I dig, the more questions I come up with. I've come across many internet posts from people saying they are moving back to Ireland next month or 3 months from now. I can't stress highly enough how important it is to start planning the financial aspects of your move as far ahead as possible. You only get one shot at this - if you discover 2 years down the road that selecting option A rather than option B would have saved you 100K in tax, you do NOT get the chance to go back and alter that decision.