Depositing money offshore...Do you do it?

[John Ranalletta]

There are lot's of ways to diversify currency risk including the many currency ETFs; however, is there any prohibition against opening a deposit account in the currency of another country? Is anyone doing it or has anyone?

 

Example:

• drive to Windsor or swim to Nassau;
• walk into a local branch of a bank headquartered in that country;
• open a savings/checking account;
• deposit US$ which are converted to local currency upon deposit
• and so on.

No intent to evade the IRS and all accounts would be declared on tax return as required.

 

TIA

[UberXY]

Consider Belize. Read about the Trust Act of 1992 enacted there.

[Patallaire]

No you can have an account anywhere that will open it for you, you must declare all income and that you have the account. We are close to Cananda here and clients were opening accounts in Canada when the exchange was more favorable, or they had a summer residence there and needed access to money to pay vendors etc.

[bakerzdosen]

I hear Iceland's nice this time of year...

 

(In case you didn't get the reference, we know some people on the board have done it and it didn't work out all that well for them.)

[BFish]

also must report the account on sch B, part III of your individual income tax return.

[John Ranalletta]

Thanks. I'd sooner buy cds from Ally, the former GMAC that's losing billions, though I'm not sure why their cds aren't treated like TBills for tax purposes since it's owned by the gubmint.

[Smoky]

I'm in a foreign country, send you money to me and I will deposit it for you!!

 

Send lots!!

[Francois_Dumas]

I have a bank account in France (checking it now... oh wow, 345 Euros in it) and had to declare it to the National Bank in Hollland when opening it, so our IRS would not miss out on anything.

 

Same (indeed) with a savings account we opened in Iceland some time ago. And no, that didn't work out very well, but we got our savings back. It turned out the State had been saving all our surplus tax money for the occasion

 

Friends of ours have an account on Jersey (or Guernsey) just because it was all the rage when they inherited from his father. The interest is lousy and he pays taxes on it anyway.

 

Me? I don't trust ANY bank anymore and have accounts in 8 or so, just to spread the risk. All small amounts, all duly monitored by our frantic IRS folks (of which we must have more than jobless people by now).

[UberXY]

There really isn't much compelling reason to put money offshore for most of us who earn money the old fashioned way. If you are doing some pre-divorce financial planning, or protecting some assets from a disliked business partner, you would most likely chose a country that does not permit courts in other countries to extradite your money, like Belize. However, if you are asked under oath in court about having assets offshore, you have to reveal them, and a judgement can still be made against you though more likely it will be made against your other, more easily seizable assets, like your house.

[John Ranalletta]

Not my intent, just considering methods to protect (not hide) assets.

 

Couple of developments are concerning to me.

• The Fed is experimenting with reverse purchases, using money market funds, e.g. the Fed would soak up MMF and replace them with the "assets" they acquired from bad banks. I asked Vanguard if they would participate and got a curt, "We don't give out that info. Look for it in our annual statements". The Fed has to rid itself of the crap it took in as collateral for TARP $. Sure, it's still "government backed", but I'd rather have TBills and not someone's bad mortgage securing my funds
• Rumblings and proposed rule making that would treat MMF as banks allowing or requiring to restrict withdrawals, effectively blocking access or at least slowing it. Here. The hallmark of MMFs has always been immediate, unfettered access to one's funds. That will soon be history.

The Group of 30 that is proposing this is comprised primarily of bank officers who want to eliminate competition for deposits as investors choose to park money with MMFs instead of their banks. Here's some language from their paper.

 

The government needs huge amounts of money and whereever and whenever they see a pile of it, they're going after it. Today, that's in pension funds, MMFs, estates. And, bankers run the world by having politicians like puppets on a string.

 

Jon Stewart's analysis is spot on.

[Bud]

We "invested" some money in the BVI's in December.

 

Chartered a 38' sailing cat, bought food, ate out, bought booze and ice cream.

 

Excellent rate of return if you ask me. Memories to last a lifetime.

[John Ranalletta]

Cool...whatever floats your boat, as they say.

[John Ranalletta]

Interesting reply from Bank of Montreal:

 

US Citizens can open accounts if they are:

 

Visa students

Coming to Canada to work

Immigrating to Canada

[Lets_Play_Two]

Interesting. We are worried about US banks, but would have no trouble sending money off to Belize!!! I wonder what the government's backing of those funds is?

[smiller]

Interesting. We are worried about US banks, but would have no trouble sending money off to Belize!!! I wonder what the government's backing of those funds is?

Exactly. If we ever get to the point where US currency is collapsing then who else can you be sure will be left standing? If one wants to follow the current fad of freaking out about this then it would seem gold and other precious metals may be the best hedge, not more fiat currencies of a different brand.

[BFish]

Makes the coffee can in the backyard sound like sound financial planning.

[Antimatter]

Isn't the Belize dollar pegged to the US dollar at 2 for 1? It was back when I visited in the late '90's (lovely country).

[John Ranalletta]

It's not a matter of "freaking out", Seth. If one's comfortable having his access to his own money restricted even more than it is today, then he can continue to sleep peascefully.

 

I don't think the dollar will collapse but it's value could decline precipitously. If I ever needed to get a large chunk of my money, I'd like as few barriers as possible.

 

BTW, somebody's got their eyes on your 401k as well as a fix to SS: (Bloomberg)

 

The Obama administration is weighing how the government can encourage workers to turn their savings into guaranteed income streams following a collapse in retiree accounts when the stock market plunged.

 

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort...

 

There is “a tremendous amount of interest in the White House” in retirement-security initiatives, Borzi, who heads the Labor Department’s Employee Benefits Security Administration, said in an interview.

 

In addition to annuities, the inquiry will cover other approaches to guaranteeing income, including longevity insurance that would provide an income stream for retirees living beyond a certain age, she said.

 

“There’s been a fair amount of discussion in the literature taking the view that perhaps there ought to be more lifetime income,” Iwry, a senior adviser to Treasury Secretary Timothy Geithner, said in an interview...

 

One proposal raised by Iwry as co-author of a paper while at the Retirement Security Project, before joining the administration, has reached Congress. A bill requiring employers to report 401(k) savings both as an account balance and as a stream of income based on an annuity was introduced on Dec. 3 by Senators Jeff Bingaman, a New Mexico Democrat, Johnny Isakson, a Georgia Republican, and Herb Kohl, a Wisconsin Democrat.

 

Given that most of our collective wealth is simply a peculiar arrangment of iron oxide particles on a spinning platter somewhere....

[smiller]

Given that most of our collective wealth is simply a peculiar arrangment of iron oxide particles on a spinning platter somewhere....

Well actually it's on a bunch of spinning platters in different locations, plus multiple backups, but... point taken.

[swfraley]

A mild hijack, but John's post on the 401(k) is exactly why I won't be converting anything (at least, not much) to a Roth this year. I don't trust that the Roth's growth will be tax-free by the time I'm ready to withdraw. With a 401(k), etc., I take the tax break now, even though it's theoretically a lot less money. Give me the bird in the hand.....

 

As for offshore funds, you can do it through goldmoney.com. Their assets are in vaults in London and Zurich. It's all precious metals, though.