Money, Taxes, And International Things

lonelyahava

I live in New Zealand.
I am a tax paying resident here.
I am also a tax-filing citizen in the US with many investments being handled primarily by my father (he's been making them since I was born) and an investment specialist person? No idea what that job-title should be.

I am wanting to see if anybody has any experience or advice on divesting myself from the US market and then transferring all of that money, whatever it is, into my NZ retirement fund. What would that do to my US Tax situation? To my NZ Tax situation? Am I being absolutely insane in wanting to do this?

Part of me just wants to put this money that is mine under something that I control, rather than it being under my dad's control. and I don't have the time, patience, or werewithall to learn how to do the US Stock Market while also trying to focus on living a life on the other side of the planet.

Anybody have any insights?

Thanks

tynic

nope, I don't think you're insane, though I will say now is probably not the best time to be pulling cash from the US market - a lot of the more conventional stocks are struggling a bit. Trying to navigate money across continents and paying taxes in multiple countries is definitely something I can relate to, though, and yeah - it's a monumental pain.

If it's more than a couple of grand, it's almost certainly worth your while finding a financial advising firm who can navigate the tax issues, legalities and logistics. (it also doesn't hurt to have that kind of support around in general, as you accumulate assets etc).


Not being NZ-located (and not being IN ANY WAY A FINANCE PERSON) I can't give any really helpful specific advice about who to get in touch with, but I can give a few tips when trying to find a financial advisor

- go local, it helps if it's easy to have face to face meetings
- nothing against one-man operations but in general I'd try and find a firm that's been around for a while and has a decent number of employees.
- the info on this isn't always available, but more and more firms are starting to put emphasis on ethical or carbon neutral portfolios, which personally I appreciate. That's probably more something for when you set up a meeting, but generally when you start up a relationship with a firm, they'll give you a questionnaire about what's important to you as an investor, to analyse your attitude to risk, etc, and it's helpful at this stage to tell them if you'd like to prioritise any particular types of investments, because that lets them select a more personalised array of stocks.

lonelyahava

I've got the Kiwisaver, which is an investment scheme. It's currently being run through one of the banks. I guess it couldn't hurt to sit down with somebody from that back and having a conversation.

At least I know I'm not crazy

Jasconius

Do you file your own taxes in the US? Or does your dad? Are your investments accounted for in those filings? What kind of investments are they? Is he managing a 401k on your behalf? A brokerage account? Other?

Before you can act you need to know what it is you're acting on.

If he has some retirement class portfolio in your name, then divesting out of that will be expensive as you'll be paying tax penalties on it, and not small ones either.

Cauld

Just as an FYI, even if you move your investments out of the US as a US citizens you are still required to file your taxes every year. If you don't make too much you probably won't owe anything.

a5ehren

There is probably advice for this online, but I suspect this is the kind of thing where you can get turbofucked on both ends of the transaction without strong, professional legal advice.

And like Jasc said, if the US money is in tax-advantaged retirement accounts (401k or equivalent, IRA, Roth IRA, etc), it will be extremely difficult to expatriate that money without paying significant early withdrawal penalties.

Your easiest solution would probably be to transition your US portfolio to a target-date mutual fund at a low-cost provider like Vanguard, Fidelity, or Charles Schwab. These funds have a nice broad base, low costs (around 0.15%, compared to the 1+% you are probably paying now), and automatic re-balancing to more conservative allocations as you age to reduce risk.

lonelyahava

Dad files my taxes for me, I don't make enough to pay anything.

Ok I'll have a quick chat with him over the weekend, find out more details. and then go from there.

Thanks y'all.

Jasconius

lonelyahava wrote: »

Dad files my taxes for me, I don't make enough to pay anything.

where does the money come from that is being used to make the investments? other than that it's being done under your name, what indication do you have that they would even be willing to give you a golf check of your entire portfolio? Have you ever seen documentation of a filed tax return in your name?

if you haven't already broached this subject with your family... I suspect you'll probably meet much more resistance than you are expecting

otherwise, as a matter of practicality... depending on the size of your portfolio and your retirement goals... the US is the place to be.... divesting a retirement portfolio under US tax law, expatriating the money to New Zealand and then re-investing it in whatever market they have (cows?) is roughly one of the most self-destructive things I could imagine doing, so be ready to be told that multiple times by the people who are managing your (their?) money

tynic

... ?? the idea that the US is the only place with access to international money markets is parochial beyond belief. Plus local Aus/NZ markets have performed better over the last ten years than the US, because we dodged the 2008 crash. And if you don't want to retire in the US then it makes no sense whatsoever to have a retirement account in the US, since unless something changes with tax treaties you will be taxed regardless of when you withdraw, even if it's past retirement age (I looked into this recently because my institution started offering me a pension account).

That said, if it's specifically a retirement account then yeah, the tax penalties will be a big hit, so you'll want to minimize those somehow. And as mentioned previously, depending on the portfolio you could still be looking at a loss of principle even without withdrawal penalties.

lonelyahava

it's a thing that he's had for me since i was a baby. with X amount of money going in every month.

I know that there's some Campbells soup stock, and I think WWE? I'm pretty sure he sold the Etsy stocks a while back. I don't *think* it's a retirement plan, just a stocks portfolio.

And yeah, i'll get some pushback I'm sure, but that will mostly be because he doesn't want to lose control of me.

Jasconius

lonelyahava wrote: »

it's a thing that he's had for me since i was a baby. with X amount of money going in every month.

I know that there's some Campbells soup stock, and I think WWE? I'm pretty sure he sold the Etsy stocks a while back. I don't *think* it's a retirement plan, just a stocks portfolio.

And yeah, i'll get some pushback I'm sure, but that will mostly be because he doesn't want to lose control of me.

ok that sounds a little bit like a brokerage account. if it's indeed a brokerage account, then those act more or less like bank accounts... and are generally considered a liquid asset. You will have to pay a little bit to sell the stock, but overall your fees should be light relative to the whole sum

Mortious

We have a US, Aus, "World", and NZ stock portfolios, all through Vanguard. It is relatively simple and hands-off though I dislike how NZ handles off-shore investment taxes.

So if you want, it's not that hard to do international investments, and it might be easier to just transfer your US money to a US Vanguard investment account and just leave it there.

As my partner handles the money things, I'll ask her to elaborate on how we transfered our money out of SA. Not 100% comparable, but might help

edit: Okay, so most of the work in transfering money was done on the SA side, including not being able to work in South Africa for 10 years with the transferal of our retirement annuities. So not really applicable to the US thing. NZ side looks like it was just bank fees.

Still, going to recommend doing an investment portfolio, quite a big fan of Index funds, ours is an ETF.