US citizen working abroad - will vanguard limit access to a brokerage account?

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Plz
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Joined: Tue Oct 09, 2018 10:26 pm

US citizen working abroad - will vanguard limit access to a brokerage account?

Post by Plz » Sat Nov 03, 2018 10:39 pm

I am a US citizen working abroad. I opened my taxable vanguard mutual fund account a long time ago, but have recently been considering turning it into a brokerage account so I can trade all at one place. However, I just read on this forum that if a brokerage finds out that I am not residing in the US, my access to the account could be severely limited.

Is this the case at vanguard? Because if so I’ll just leave it be.

Skiandswim
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Joined: Tue Dec 21, 2010 3:24 pm

Re: US citizen working abroad - will vanguard limit access to a brokerage account?

Post by Skiandswim » Sun Nov 04, 2018 5:11 am

The investment situation for US citizens living abroad has been more complicated under Foreign Account Tax Compliance Act (FACTCA). I can relate our experience from several overseas moves. During one move, I updated our mailing address to reflect our overseas address. Vanguard promptly limited my transaction capabilities (forgot all the details), but let me retain the accounts. On subsequent moves, we have retained a US mailing address and have filed federal and state taxes, maintained credit cards, etc all with that address. We have had no restrictions from this approach.

Advice from a tax advisor:
• When you are residing overseas, each brokerage firm will have their own policies and procedures concerning your country of residence, don’t expect a consistent answer.
• Once a firm decides to treat you as a non-US resident, if is very difficult to change their position while overseas.
• Brokers will ask you for a “mailing address” -provide a US mailing address even when overseas for a period of time (be prepared to support that you actually spend some time at that address)
• Firms will review your residency status periodically.

Links that might help:
https://www.americansabroad.org/mutual- ... trictions/
https://www.aaro.org/advocacy/banking/5 ... rage-front

To your original question, I would avoid switching to a brokerage account.

AlohaJoe
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Location: Saigon, Vietnam

Re: US citizen working abroad - will vanguard limit access to a brokerage account?

Post by AlohaJoe » Sun Nov 04, 2018 5:25 am

Turning it into a brokerage account has no bearing on whether Vanguard will lock access. This forum has lots of stories over the years of people with regular mutual fund accounts being locked.

A small number of people seem to be grandfathered in by Vanguard. Or something. Anyway, just go with a company that clearly supports this like Schwab or Interactive Brokers.

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RickBoglehead
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Re: US citizen working abroad - will vanguard limit access to a brokerage account?

Post by RickBoglehead » Sun Nov 04, 2018 7:02 am

Using a US-based VPN seems to avoid detection.
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HueyLD
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Re: US citizen working abroad - will vanguard limit access to a brokerage account?

Post by HueyLD » Sun Nov 04, 2018 7:11 am

RickBoglehead wrote:
Sun Nov 04, 2018 7:02 am
Using a US-based VPN seems to avoid detection.
True, but you still need a valid U.S. address.

An expat who used a UPS store box to acquire a U.S. street address. But some sophisticated software was able to identify that address as a de facto p.o. box and she was told to close her account.

In addition, using a relative's home address can cause state income tax problems because your relative's home state may consider you a resident unless your relative lives in a no income tax state.

Topic Author
Plz
Posts: 99
Joined: Tue Oct 09, 2018 10:26 pm

Re: US citizen working abroad - will vanguard limit access to a brokerage account?

Post by Plz » Sun Nov 04, 2018 7:50 am

Skiandswim wrote:
Sun Nov 04, 2018 5:11 am
The investment situation for US citizens living abroad has been more complicated under Foreign Account Tax Compliance Act (FACTCA). I can relate our experience from several overseas moves. During one move, I updated our mailing address to reflect our overseas address. Vanguard promptly limited my transaction capabilities (forgot all the details), but let me retain the accounts. On subsequent moves, we have retained a US mailing address and have filed federal and state taxes, maintained credit cards, etc all with that address. We have had no restrictions from this approach.

Advice from a tax advisor:
• When you are residing overseas, each brokerage firm will have their own policies and procedures concerning your country of residence, don’t expect a consistent answer.
• Once a firm decides to treat you as a non-US resident, if is very difficult to change their position while overseas.
• Brokers will ask you for a “mailing address” -provide a US mailing address even when overseas for a period of time (be prepared to support that you actually spend some time at that address)
• Firms will review your residency status periodically.

Links that might help:
https://www.americansabroad.org/mutual- ... trictions/
https://www.aaro.org/advocacy/banking/5 ... rage-front

To your original question, I would avoid switching to a brokerage account.
Thank you!

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