Have you received the unfortunate news that Chase (JP Morgan) & Wells Fargo are closing your IRA or retirement accounts? You may be one of the many unfortunate US expats that discovered recently that many of the trusted American banking institutions are no longer offering their services to Americans living overseas.

Household names like Chase, Wells Fargo, or even MerrillEdge or Charles Schwab have decided over the past couple years to cut their relationships with their overseas clients, often forcing them out of their accounts with little or no warning by simply cashing out their investments and sending them a check. This has left many former clients shocked, anxious, and scrambling to find a solution for their IRA and retirement accounts.

The repercussions of FATCA, MIFID, and foreign licenses

As most American expats may already know, in 2010 the United States imposed the FATCA reporting rules for all U.S. persons and their banks, in order to keep track of all their foreign bank accounts and investments. The backlash unfortunately was quite dramatic, as many banks – American and foreign – simply no longer accept U.S. expat clients, leaving them with few local banking options in Europe, as well as many American banks refusing to keep them on with a foreign address.

In addition, American banks don’t necessarily have the required foreign licenses to trade or sell securities overseas, which is why your U.S. bank will occasionally keep your checking accounts, but will liquidate your investments. Americans living in Europe also face the additional European MIFID2 regulations, which were put into place by the E.U. to protect its investors who may not have much financial knowledge. One could say the regulations are a bit “over-protective”, but it remains a hurdle, leaving US expats in Europe with few investment options.  

The clock is ticking if your IRA or retirement plan account was cashed out 

For closed IRAs and other retirement accounts, there is an important time-frame  to respect in order to avoid paying taxes on the amount. Ideally, you would have received prior notice of the impending liquidating of your accounts, which would provide you enough time to take action. On the other hand, if you suddenly received a check at home, (or address registered to that account) you have 60 days to move those funds into another retirement account in order to steer clear  tax responsibilities. 401(k)s have additional complications, and we recommend you contact us immediately to discuss your options.

Should I just keep a U.S. address, even though I live in Europe?

Many people – and even some American financial advisors – recommend keeping a U.S. address for all your American bank and financial accounts, even though you really live overseas. As a result, your American banks will continue to think you live in the United-States, and continue to provide you with all the services of domestic clients. 

This is taking advantage of a legal gray zone, but that’s progressively becoming more and more black. For example, Financial institutions must comply with Know Your Customer (KYC) rules, and have a legal obligation to verify your identity and residency. If you are fraudulently declaring the wrong address, the harmful consequences can pop up unexpectedly:

• In some cases, banks may find your real overseas address by other means. They can check your address through other channels, such as your return address on your IRS filings or other statements from third parties. As a result, they could change your address without your knowledge, and trigger the process of closing your accounts without warning.
• If you´re starting to plan for your succession, claiming a false address in the United-States could put you in hot water with the U.S. authorities and cause some heavy fines for your beneficiaries, possibly wiping out any investment optimization you’ve worked so hard for. 
• Having a U.S. address could make you responsible to file and pay state taxes that would not be necessary if instead, you simply claimed your overseas address. This could be a considerable amount if for example, you still own property or if you have taxable investment or retirement accounts. In addition, keeping a U.S. address could keep you on jury duty rolls, and pose problems when trying to vote from abroad.

What to do if Chase & Wells Fargo are closing your IRA or retirement accounts

The solution is to work with the cross-border advisors at Harrison Brook who work specifically for U.S. expats with a foreign address, and help rollover your account into a fully compliant IRA or retirement fund. Your account will be transferred to a portfolio with Exchange-Traded Funds (ETFs), which are tax-efficient, cost-effective alternatives to mutual funds, and available to U.S. non-residents. Our portfolios provide peace of mind and the assurance that things are done right.

Request a consultation

As U.S. banks become more reluctant to serve Americans overseas, the recent closing of Chase (JP Morgan) and Wells Fargo accounts should be a warning to all American expats. The reality is that navigating compliance is an ongoing requirement for all US expats, in order to balance local and American financial regulations. 

Harrison Brook specializes in financial solutions tailored specifically to U.S. expats residing in Europe and abroad, coupled with the comprehensive financial acumen to optimize your investments. Harrison Brook is here to assist you in managing your financial assets, so don’t hesitate to book a meeting with us.