General News & Insights

A General Accounting Office report* has helped cast light on why the US government remains reluctant to drop the Foreign Account Tax Compliance Act (FATCA) system in favour of the globally-accepted Common Reporting Standard (CRS).

The CRS came into effect in 2014 as a response to international tax evasion, money laundering and other financial crime. Up until this point, it was extremely difficult for different jurisdictions to share information regarding accounts, income, assets and other financial arrangements. Those instruments that were available were severely limited and had little scope outside of the efforts of individual agreements between two countries.

The Organisation for Economic Co-operation and Development (OECD) changed all this by introducing the CRS, which has quickly become the global standard for exchange of information between the tax authorities of nation states across the world.

It's possible that you will never have to make any financial decisions more important than those relating to your retirement plans. These are likely to involve the consideration of a number of important factors, including the following:

Your present and future cashflow needs Whether you wish to create a legacy for family or charity Your level of risk-tolerance Whether you wish to simply protect or to grow your wealth An assessment of market conditions Your personal goals

Retirement planning for Americans is a complex affair in even the simplest of circumstances. For American expats living abroad however, trying to make sense of their options in relation to IRAs, Roth IRAs and other retirement accounts may prove to be a particularly headache-inducing experience.

The Foreign Account Tax Compliance Act (FATCA) has had many consequences, including some that have been both profound and unintended.

One legacy of FATCA – although positive factors such as tightened anti-money laundering regulations should also be taken into account – is the difficulty that many Americans abroad have faced in relation to their IRA accounts, with many being closed as the saver becomes US non-resident.

As a result, an increasing number of non-residents are finding themselves in an unenviable position when it comes to their retirement and IRA planning.

Probably the most significant age for anyone thinking about retirement planning in the USA is the age at which you start. While there's no set age or best age, the sooner you decide to start saving for your retirement the better.

As an expat in the US, deciding how to save for your retirement can be tricky, but the bottom line is, if you want financial security in the future, you need to save for it in the here and now. Talking to a financial adviser can help as the type of plan you opt for will depend on your individual circumstances and your retirement objectives.

One of the fundamental mistakes people make when planning for retirement in the US is to underestimate the possibility of developing a long-term chronic health condition and the impact that such an occurrence is likely to have on their spending power.

Yet the truth is that because we are living longer than ever before we are also more likely to need some form of help with the basics of day-to-day existence. Quite simply, whether by illness, accident, physical debilitation or mental decline, incapacitation and the consequent need for long-term care can happen to anyone.

A 401(k) can be a bedrock part of your retirement and legacy planning in the US, but what do you do if you feel that yours is no longer the right vehicle for your long-term strategy or you find yourself struggling as you try to balance multiple small accounts from several jobs?

Of course, not everyone takes the same approach to their old 401k(s) once they move to a new workplace: many workers opt to leave their money in the plan while a minority will transfer it into a IRA.

However, the majority may be missing an opportunity; IRA consolidation is a way to avoid the drawbacks of remaining invested in an unsuitable 401k plan while also opening up many potential benefits.

If you decide to settled in the United States after a life of living and working in the United Kingdom, you will have to work out what you should do with your UK pensions in the US. Understanding how to manage your existing international pensions is crucial to your financial longevity in the USA.

In this situation, you have three main options for any defined contribution pension fund in the UK of which you are a member: