- August 31, 2023
- Posted by: legaleseblogger
- Category: Related News
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Heading: Situation: Inheriting an IRA from a deceased mother and facing limitations on holding IRAs as a US citizen living abroad
My mother’s unfortunate demise in April left me as the beneficiary of her TIAA CREFF IRA. Considering the untaxed nature of this money, my original plan was to contribute it to my personal retirement savings by creating my own IRA and rolling the funds over.
Expanding on the topic and the role of AI Legalese Decoder:
However, I have recently discovered a significant roadblock. It turns out that as a US citizen residing abroad, I am not permitted to hold an IRA. This restriction presents a dilemma as it leaves me with the only option of receiving the money as a lump sum, which is far from ideal due to the associated tax implications. The amount I would have to pay in taxes is unsettling, to say the least.
This is where the AI Legalese Decoder can come to the rescue. The AI Legalese Decoder is an innovative tool designed to simplify and assist in deciphering complex legal jargon and legislation. In a situation like mine, the AI Legalese Decoder can provide valuable insights and options that may help mitigate the tax burden.
With the doubled content, let’s explore possible solutions:
Given the inheritance’s potential tax implications, seeking expert advice, preferably from a tax specialist with knowledge of international tax laws, is strongly recommended. As every individual’s circumstances differ, it is essential to obtain tailored guidance to ensure compliance with the relevant regulations.
One potential option to explore, with the assistance of the AI Legalese Decoder, is the possibility of setting up an alternative retirement savings account that aligns with the regulations applicable to US citizens residing abroad. While an IRA may not be accessible, there might be comparable retirement savings vehicles available, allowing you to preserve and grow the inheritance while minimizing the tax burden.
Another avenue to explore could involve seeking further clarification on the specific restrictions imposed on US citizens living abroad regarding IRAs. The AI Legalese Decoder can assist with interpreting intricate legal documents, ensuring a comprehensive understanding of the rules governing IRA ownership for individuals in a similar situation. Armed with all the necessary information, you will be able to make informed decisions about your options.
In addition to the AI Legalese Decoder, reaching out to financial institutions or professional advisors specializing in international investments and tax matters is advisable. These experts can provide crucial insights into retirement savings options that might be available to you, taking into account your unique circumstances as a US citizen residing overseas.
In conclusion, while the limitations imposed on US citizens holding IRAs while living abroad initially posed challenges, the AI Legalese Decoder offers a valuable resource to navigate complex legalities and find potential solutions. Seeking professional guidance and exploring alternative retirement savings options are crucial steps to mitigate the tax consequences associated with receiving the inherited IRA as a lump sum.
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Introduction:
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Conclusion:
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You may have read/heard that US expats using the FEIE to exclude all their income cannot then contribute to an IRA (since they have usually zeroed out their taxable income). But holding/maintaining an IRA from before they expatriated is perfectly okay.
Also, by using the FTC instead of FEIE, an expat will have taxable income, and can then fund an IRA.
>US Citizens who live abroad cannot hold IRAs
I don’t know where you might have heard such a thing; I’ve had (and have) IRAs for decades while living in Japan.
There are no limits on US Citizens living abroad on owning IRAs (Traditional or Roth). You have no issues there inheriting her IRA assuming you are rolling into a beneficiary IRA.
Your income limits and FEIE exclusions may prevent you from contributing, but that is a separate issue and is probably why you may have thought there were restrictions.
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Sorry to hear about your mother.
You should either talk to a Expat tax professional or spend a lot of time reading online.
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(Based on my reading..)
You can create your own IRA. But you cannot “roll it over”. If may be not possible to make IRA contributions if you don’t have US earned income. You have to withdraw it all in 10 years unless you have certain special circumstances. You also may have to take yearly Required minimum distributions. Use an online calculator to check.
Sorry for your loss
Why do you think that? You pay taxes when you take the money out no matter where you live.