Moving out of USA, How to optimize

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coolme
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Joined: Thu Jun 01, 2017 10:29 am

Moving out of USA, How to optimize

Post by coolme » Mon Jul 10, 2017 10:43 am

Hi,

I recently started looking in passive investing and realized my mistake. I need some guidance now since I have some cash and I m moving out of USA back to India. Here is my situation:

age : 39
Total years in USA: 11
401k : 205000 , Don't have any Vanguard funds. Mix of US , international and Bond. contributing Max
His IRA: 25000 Individual Stocks
Her IRA: 25000 Individual Stocks
HSA: 40000 with optum

Individual Taxable: 111000 , Individual stocks , some ETFs

Cash: 275000 , in savings account.

Cash : 115000 USD in Indian Rupees , earning 7%. CDs

As I said, I realized my mistake now not to put my savings by regularly investing. I was more into individual stocks and couldn't find any stocks to invest and accumulated that cash. My emergency need for 6 month would be 30000.

I want some guidance now what to do with the cash. I have taken the transfer from my company to move to India. Since I will still be working with the same company the HR says I can't rollover my 401k. I was thinking of doing roth since my US taxable income will be very low. I will not be earning in USD and I believe there is a large foreign income exemption.

Since I will still be earning in India , and already have cash in CDs in India. I don't plan to keep anything in cash in USD. may be 10000 max just to have a bank account.

Please suggest how to invest this cash.

Thanks

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prudent
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Re: Moving out of USA, How to optimize

Post by prudent » Sun Jul 16, 2017 7:29 pm

Bump for a new member.

tampaite
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Re: Moving out of USA, How to optimize

Post by tampaite » Mon Jul 17, 2017 1:04 pm

coolme wrote:
Individual Taxable: 111000 , Individual stocks , some ETFs

Cash: 275000 , in savings account.


Since I will still be earning in India , and already have cash in CDs in India. I don't plan to keep anything in cash in USD. may be 10000 max just to have a bank account.

Please suggest how to invest this cash.
Since you already have a taxable account - you can move funds from savings into the taxable and invest in target funds.

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Watty
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Re: Moving out of USA, How to optimize

Post by Watty » Mon Jul 17, 2017 1:12 pm

I don't know much about this but it was not clear is you had become a US citizen or are likely to return to the US.

As I recall to be covered under Social Security and Medicare you have to paid into it for 40 quarters which is about 10 years but there are a lot of details on that. It would be good to double check on that and try to stretch out your work dates if you just need a few more moths of US based work to qualify.

btenny
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Re: Moving out of USA, How to optimize

Post by btenny » Mon Jul 17, 2017 1:26 pm

Welcome to Bogleheads. We need to understand your current citizen status to evaluate your future investment options. And we need to understand if you are planning on staying in India in the future and when you retire. We also need to know if you will be paying any US taxes and or FICA taxes due to working for a US company?

Good Luck.

coolme
Posts: 2
Joined: Thu Jun 01, 2017 10:29 am

Re: Moving out of USA, How to optimize

Post by coolme » Mon Jul 17, 2017 1:27 pm

Yes we are US Citizens and I have 11 yrs of work history (> 40 SS credit) . My spouse has 3 yrs of work history and not enough SS credit as of now. At this point we have no plans to come back but it all depends on how well we adjust in India.

Right now I opened the vanguard account and invested in Total Stock Market Index and Total International stock market index. 3000 $ each to start and 2000 $ every 15 days with 70/30 .
Plan is to move them to Admiral shares later.

The forum is so helpful and I did above based on the previous posts. I understand I should have invested lump sum.

With regards to SS credit another question arises , does it make sense for my spouse to complete 40 SS credit at the minimum pay. I can look into if she can still be employed by US company paid by W2 . Is there any benefit to it ?

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ray.james
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Re: Moving out of USA, How to optimize

Post by ray.james » Mon Jul 17, 2017 2:00 pm

A few things:

Note: I am not a current Lawyer/International Tax laws.

- Are you planning to invest everything in USD? Make sure you have some residential address or vanguard/others will Kick accounts.

- Are your kids planning to go for college is USA? 529 account investments are good for them to eventually come back to study.

-Does your plan allow in house 401k roth conversions. If so, you can do that with success. As you mentioned, low tax rate + foreign exclusion helps. If so please plan to do these.

-If not you can convert those IRA to roth first. I am assuming these are traditional IRA's. Even withdraw - see next point.

-Become aware of RNOR tax status in India. The Indian government allows 2 years to bring any foreign money/gains tax free into the economy for returning citizens. I have seen clients use this to much success to with draw 401k's/ roth conversions with least taxes between both countries over 3 years. I am not aware of recent changes, so a good tax attorney might advise better.

-Investing in India is expensive with mutual funds. Do note any returns are nominal and consider it with current 5-7% inflation rates.

- Hsa's can and are allowed to be used for medical expenses reimbursement from abroad. Need paperwork in order and store them for 7 years atleast if IRS questions it.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

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Tyler Aspect
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Re: Moving out of USA, How to optimize

Post by Tyler Aspect » Mon Jul 17, 2017 6:41 pm

Vanguard is really strict about having US mailing address. You might need to have everything in ETF shares so that it is easier to move them out of Vanguard if they find out you are living abroad. I heard Fidelity is less strict. Maybe other people can add some details here.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

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Watty
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Re: Moving out of USA, How to optimize

Post by Watty » Mon Jul 17, 2017 7:39 pm

coolme wrote:Yes we are US Citizens and I have 11 yrs of work history.... (> 40 SS credit)
I don't have any good answers but there are two more things to research.

1) Your state income taxes might not automatically go away especially if you keep a mailing address in the state.

2) Potential estate taxes problems if you ever give up your US citizenship or if someone that is not a US citizen inherits your retirment account some day. Your estate might need to go through a US probate court too.

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