L1: statusI am an American citizen living in south america, I want to set up a sepp 72t account. A repat Vanguard told me they cannot do it because I am considered a foreign invester. Does this sound right to you or could he be wrong?2011-03-23 16:06, By: slim, IP: [220.127.116.11]
L2: statusMy guess is that this is a Vanguard rule, not an IRS rule. But they have good reason for it because your plan would be caught up in mandatory withholding on IRA distributions out of the US and also caught up in tax treaty issues between the country you are in and the US. Often the country will tax your distribution and you have to claim a foreign tax credit against US taxes. All is is a recipe for confusion and busted SEPP plans and Vanguard likely chooses not to offer support for a plan because you may not have control of the amount of actual dollars you are getting. That does not mean that you could not set up a plan without telling them and try to handle all these moving parts. But it would be hazardous at best.That’s my guess, but I suggest you elevate the discussion to a senior level at Vanguard and get a viable reason from them. Let us know what they say.2011-03-23 22:15, By: Alan S., IP: [18.104.22.168]
L3: statusI still own a house in the US and keep my residence in the US and all my banking, does this matter…..thankyou2011-03-23 23:30, By: slim, IP: [22.214.171.124]
L4: statusNot really. The key is that you are a US Citizen irrespective of the above and must file a USreturn. Youmay also owe taxes to the country you are in, but there is aforeign tax credit that prevents you from paying double taxes. There is also an earned income exclusion of around 90k that you can exclude on your US return.We generally recommend paying quarterly estimates when you have a SEPP as it eliminatesdiversion of part of your annual distribution to the IRS. But when US retirement plandistributions are sent out of the US, the IRS wants to assure that youwill file and pay so they have mandatory withholding requirements.But I would see if Vanguard has other specific reasons for their decision not to support a SEPP.You can still try it, but the pitfalls are greatly increased especially if you are getting no support from Vanguard. 2011-03-24 00:42, By: Alan S., IP: [126.96.36.199]
L5: statusBut, my money is sent to a U.S. bank and I will withhold tax payments on this amount2011-03-24 01:07, By: slim, IP: [188.8.131.52]
L6: statusMaybe there is a language or communications problem here.
Alan has told you several times to discuss your situation with a senior manager at Vanguard to see if there is some way that they can accommodate you. He has given you reasons why he thinks that Vanguard might not want to handle this, but again he suggested that you talk to them.
Arguing with him as to why YOU think they should do it will not get you anywhere. TALK TO VANGUARD !!!2011-03-24 01:24, By: dlzallestaxes, IP: [184.108.40.206]
L7: statusI agree with Alan and Dlz completely. Talk to Vanguard and do not settle for one of their lower level account reps. You need detailed answers to your questions. Get a supervisor or the supervisor’s boss to answer your questions.
If it turns out that Vanguard can’t or won’t assist you in this, then a possible alternative might be to do a direct transfer to a bank IRA. If the bank has branches in both the US and your location, they might be able to do what you want. You will need to talk to them to see if they will do this before transferring your IRA to them. HSBC has many branches around the world, so might be a possibility.2011-03-25 04:45, By: Ed_B, IP: [220.127.116.11]