US Nonresident Aliens - Vanguard freezing legacy accounts

[Else]

[Title was "Legacy platform retiring end 2025 - unknown impact on NRA's" --admin LadyGeek]

Apparently some Vanguard clients recieved emails that the legacy platform will be retired by end of 2025. Accounts will be transferred to Brokerage and are frozen.
Vanguard specified that frozen accounts could not buy or trade, dividends default to reinvest. That leaves questions as to what will happen to NRA accounts. I sent the following questions via secure message:

Dear Team, I read about a transition process from legacy to brokerage platform. The date for retiring the legacy platform is apparently end 2025. I did not recieve any communication on this. I am a non Resident. I assume my account would transfer, but be remain a frozen account due to my NRA status. Please confirm this assumption. I have an active w8ben on file. Theoretically I would have to renew that before end of 2026. Do you intend to keep up that process for NRA's on those frozen accounts? Could I still submit a w8ben online or by mail? Would you continue to honor treaty rates on frozen accounts? I thank you in advance for your help.

I will update, when I recieve an answer. Did any NRA's recieve this email? Thanks

[TedSwippet]

I will update, when I recieve an answer. Did any NRA's recieve this email? Thanks

Nothing here so far. Thank you for taking the initiative on this. Let's see what Vanguard say.

[Else]

Apparently some Vanguard clients recieved emails that the legacy platform will be retired by end of 2025. Accounts will be transferred to Brokerage and are frozen.
Vanguard specified that frozen accounts could not buy or trade, dividends default to reinvest. That leaves questions as to what will happen to NRA accounts. I sent the following questions via secure message:

Dear Team, I read about a transition process from legacy to brokerage platform. The date for retiring the legacy platform is apparently end 2025. I did not recieve any communication on this. I am a non Resident. I assume my account would transfer, but be remain a frozen account due to my NRA status. Please confirm this assumption. I have an active w8ben on file. Theoretically I would have to renew that before end of 2026. Do you intend to keep up that process for NRA's on those frozen accounts? Could I still submit a w8ben online or by mail? Would you continue to honor treaty rates on frozen accounts? I thank you in advance for your help.

I will update, when I recieve an answer. Did any NRA's recieve this email? Thanks

UPDATE: VANGUARD ANSWERED: quote:

" RE: Closing legacy platform
Dear. :

Thank you for taking the time to contact us.

>>Account Transition>>

Account types that are ineligible to be transitioned to our brokerage platform will not be enrolled in the plan for automatic upgrades in the future. Nonresident aliens are still ineligible to upgrade their accounts to our brokerage platform at this time.

>>Form W-8>>

We still ask that you continue to update your Form W-8 via an online application to maintain your status as a nonresident alien. Vanguard only accepts this form via our online process, as it is unable to be received through the mail.

To access Form W-8, please follow these steps:

1. Log on to vanguard.com.
2. Select the document icon at the top of the page, then choose "Tax forms & information."
3. Choose "Update your Form W-8" and follow ..."

I gave it a try... . What the future holds for NRA's at Vanguard remains a secret.

[TedSwippet]

I gave it a try... . What the future holds for NRA's at Vanguard remains a secret.

Thank you for your efforts here. It is noticeable, if not surprising (at least these days) that Vanguard didn't make even the minimal effort required to pretend to answer.

Any luck with Schwab? I recall you were talking to them a while back. Unless I'm misremembering, did you get anything useful from them?

[Else]

Any luck with Schwab? I recall you were talking to them a while back. Unless I'm misremembering, did you get anything useful from them?

It is just about a year ago that I inquired with Schwab international. No surprises: can transfer mutual funds ( had specifically the 5 funds checked, that I hold) , no new investments, reinvest dividends only, w8ben can be submitted, an additional international brokerage account could be opened for new investments. I did not open an account so far. Schwab international advised, that the approval could take 3 weeks. My ultimate fear is not be given enough time by vanguard to transfer. I have some hope left, when all this Vanguard transition is done, that NRA 's could stay with Vanguard with similar conditions as Schwab international. I would prefer to stay with Vanguard. Regulations in regard to holding a brokerage account could change in the future. I would hate to be at an offshore company, if that happened. I am not rushing, but contemplating a lot. One thought I have is that Vanguard could sell it's NRA business. Just like they did with i401k's. We could end up at Schwab international anyway.

[bluejeansman]

[Thread merged into here --admin LadyGeek]

UK investor with money in Vanguard USA for last 20+ years. Taxable account and Roth IRA from my US days in a past life. relocated to UK in 2005 and Vanguard had no problem with me being non resident for last 20 years. But they have a problem now. Got a bombshell of a message today (below).

Details of my accounts with Vanguard USA:

Total value : $820K

*) Taxable Account : Vanguard S&P 500 index fund and Total Stock market index fund. Total fund value : $460,000. capital gain : $165,000 : I pay dividend tax on these funds in the UK but the funds do not have UK HMRC distributor status, therefore disposal is taxed at UK income tax rates. (40% over £50K and 60% from £100K - £125K).
*) Roth IRA : Vanguard Total Stock market index fund and Total bond market index fund. Total value : $360,000. UK thankfully fully recognizes tax-sheltered nature of Roth.

age : 56. Finished all Roth conversion in 2019.

Vanguard has sent me a message today as follows : (Letter below). In short they want to move me to Brokerage platform but unable to do that since I am non resident alien and don't have brokerage account. So they want me to move to "another provider". But alas, no US provider will take me as a non resident.

But I have time, until "end of" 2025. Don't know exactly what happens after that.

So, what are my options ? I am currently not employed in UK.

1) Move assets in kind to Interactive brokers / Charles Schwab / Fidelity. I have a US Fidelity Roth IRA and Interactive brokers account. Perhaps they may help.
2) if there is no way out, sell taxable. Pay UK Income tax on $165,000. Can I put some money into UK pension ? I am not working so I cannot contribute to pension. Take out Roth and pay 10% penalty.
3) Go for wealth manager. Maseco Financial charges 1.3% all in (manager fees, custodian fee, fund fee) and they can transfer "in kind" and manage US and UK portfolio.
4) Relocate to India before Mar 2025. India has a 1 year period of "No tax on overseas income and gains" during RNOR (resident and non ordinarily resident) period. Then I can close everything out and move to Interactive brokers. Then I will not be able to return back to UK for 5 years.


Message from Vanguard below :

Your Vanguard mutual fund account needs attention

You're receiving this notice because your Vanguard mutual fund account remains on our legacy investment platform, which will be retired for retail investor accounts by the end of 2025. Going forward, Vanguard retail investors will need to use a brokerage provider (e.g., a Vanguard Brokerage Account) to purchase, redeem, and trade Vanguard mutual funds.

According to our records, you are not a permanent U.S. resident and, therefore, under Vanguard policy, are ineligible to open a Vanguard Brokerage Account. Because of this constraint, we're unable to move your current investments to a Vanguard Brokerage Account.

Options for your account
You have a few options for the management of this account moving forward, including identifying an alternative investment provider or redeeming your assets. You can also visit our website for non-U.S. investors at global.vanguard.com for information about other available products and services.

If your account remains open on our legacy investment platform by the end of 2025, it will be restricted to prevent any transactions other than withdrawals or transfers of assets to another firm.



Any suggestions ? Causing a lot of stress. Thanks a lot in advance !!

[123]

The last sentence from Vanguard seems to allow the accounts to continue with limitations. You won't be able to make additional investments so you would need to find an alternative broker for that. But it seems to permit withdrawals so RMDs might still be possible. The message doesn't directly address the dividend reinvestment question so perhaps you need to contact Vanguard about that.

[vriguy1]

Contact a knowledgeable tax professional with US and UK tax law expertise. It might cost you a couple of thousand dollars or pounds but the sums involved are large enough to justify that.

[bluejeansman]

The last sentence from Vanguard seems to allow the accounts to continue with limitations. You won't be able to make additional investments so you would need to find an alternative broker for that. But it seems to permit withdrawals so RMDs might still be possible. The message doesn't directly address the dividend reinvestment question so perhaps you need to contact Vanguard about that.

Thanks 123. Hopefully they will allow me to just maintain but it is like slowly getting squeezed by a python. At some point in future I wont be able to breathe.

RMD does not apply since I have a Roth IRA (not rollover IRA) and also a taxable account.

On another note, I asked Vanguard what they would do if I were US resident/citizen. They said they will migrate the "legacy" mutual fund account to brokerage account. I asked if that means it will trigger a sale of the mutual funds to switch to ETF. It seems they have a way of converting mutual funds to ETF that does not trigger a sale. (but obviously not applicable to me since I am non resident). But this is not chemistry. I dont know how they can do this conversion without triggering a sale (and hence taxes). But I guess I will never get to find out since I am a non resident alien.

I know Fidelity does not allow mutual funds for non residents. So, even if I move to another broker, I dont see how I can maintain my mutual funds. I will be forced to liquidate which means high taxes. There are custodians (such as Pershing USA) but these are available only thru wealth managers.

Big dilemma for me now. Almost forcing me to quit UK and start from a clean slate in another country.

Thanks

[jebmke]

It seems they have a way of converting mutual funds to ETF that does not trigger a sale.

I think the MF and the ETF are different share classes of the same fund so conversion is not taxable. I would inquire as to the applicability to you with VG and a tax advisor. Can you elaborate why you think it might not be applicable to you? If you were able to convert to an ETF at VG and then transfer to a brokerage that allows you to be a NR without triggering any tax, that would seem to be a possible solution.

[TedSwippet]

You're receiving this notice because your Vanguard mutual fund account remains on our legacy investment platform, which will be retired for retail investor accounts by the end of 2025. Going forward, Vanguard retail investors will need to use a brokerage provider (e.g., a Vanguard Brokerage Account) to purchase, redeem, and trade Vanguard mutual funds.

According to our records, you are not a permanent U.S. resident and, therefore, under Vanguard policy, are ineligible to open a Vanguard Brokerage Account. Because of this constraint, we're unable to move your current investments to a Vanguard Brokerage Account.

As predicted last year. Over the past few years, Vanguard has become increasingly hostile, and this is the current apex. I maintain a very short list of companies with which I will never, ever do business again, and Vanguard has just joined it.

1) Move assets in kind to Interactive brokers / Charles Schwab / Fidelity. I have a US Fidelity Roth IRA and Interactive brokers account. Perhaps they may help.

I had a very positive and productive conversation with Schwab a few months ago, so I'd suggest starting there. The wrinkle with them is that they won't offer US domiciled ETFs (MIFID/PRIIPs), so you end up having to use either individual stocks or (maybe) UCITS ETFs, and with pricey trades. Also, it wasn't clear whether they offered an execution-only plan, or if you'd be stuck with something 'advised' at 1%/year or more.

Maybe a little more in this thread: viewtopic.php?t=433099

If you get anything useful from Schwab, please report back. Besides you and I, there will be others affected too. (Perhaps worth changing the thread title to something like "US nonresident alien : Vanguard ...", since Vanguard's [(removed) --admin LadyGeek] is not restricted to just UK residents.)

No idea about Fidelity US, but since you have it, potentially a useful bolthole. Last I looked, Interactive Brokers would only open IRAs for US citizens.

2) if there is no way out, sell taxable. Pay UK Income tax on $165,000. Can I put some money into UK pension ? I am not working so I cannot contribute to pension. Take out Roth and pay 10% penalty.

If no employment income, your UK pension contribution is limited to £2,880 net (£3,600 gross). Barely a drop in the $165,000 bucket.

I've contemplated taking my entire Vanguard 401k in one go. I'm likely forever in top tax brackets, so for me tax deferral is of limited use. And the increasing hassle of dealing with the US, the IRS, and now (damn them) Vanguard is rapidly becoming too tiresome to continue. Frankly, I'm simply sick of it all. Your python metaphor is very apt.

3) Go for wealth manager. Maseco Financial charges 1.3% all in (manager fees, custodian fee, fund fee) and they can transfer "in kind" and manage US and UK portfolio.

Yeah, but costly. Compare with the benefit to you of continued tax deferral ... if possible, that is. You may well find that you have to sell everything you hold in Vanguard anyway; perhaps Maseco cannot handling transfer in of actual current holdings.

4) Relocate to India before Mar 2025. India has a 1 year period of "No tax on overseas income and gains" during RNOR (resident and non ordinarily resident) period. Then I can close everything out and move to Interactive brokers. Then I will not be able to return back to UK for 5 years.

At least you have that option. I do not.

Fifteen years ago I would have recommended Vanguard to anybody. Today, they are firmly on my [(removed) --admin LadyGeek]. How are the mighty fallen.

[Boglenaut]

It seems they have a way of converting mutual funds to ETF that does not trigger a sale.

I think the MF and the ETF are different share classes of the same fund so conversion is not taxable. I would inquire as to the applicability to you with VG and a tax advisor. Can you elaborate why you think it might not be applicable to you? If you were able to convert to an ETF at VG and then transfer to a brokerage that allows you to be a NR without triggering any tax, that would seem to be a possible solution.

You need a Vanguard brokerage account to convert VG mutual funds to ETFs. Op cannot open one.

[jebmke]

I think the MF and the ETF are different share classes of the same fund so conversion is not taxable. I would inquire as to the applicability to you with VG and a tax advisor. Can you elaborate why you think it might not be applicable to you? If you were able to convert to an ETF at VG and then transfer to a brokerage that allows you to be a NR without triggering any tax, that would seem to be a possible solution.

You need a Vanguard brokerage account to convert VG mutual funds to ETFs. Op cannot open one.

Good point. Perhaps the Roth can be dealt with by liquidating to cash in the Roth and then transferring to another broker and investing back to desired assets. The taxable seems to be a real problem.

[Watty]

UK investor with money in Vanguard USA for last 20+ years. Taxable account and Roth IRA from my US days in a past life. relocated to UK in 2005 and Vanguard had no problem with me being non resident for last 20 years.

Are you a US citizen?

If not a bigger concern could be that if you die while you have the accounts your estate could be hit with the ridiculously high non-resident alien estate taxes so it would also be good to look into that if you are not 100% sure that your estate will not be subject to that.

Also look into what happens if a non-US citizen inherits your accounts.

[TedSwippet]

Perhaps the Roth can be dealt with by liquidating to cash in the Roth and then transferring to another broker and investing back to desired assets.

But only if you can find a provider that will open a new Roth IRA for a US nonresident alien. Options there are likely thin to none.

UK investor with money in Vanguard USA for last 20+ years. Taxable account and Roth IRA from my US days in a past life. relocated to UK in 2005 and Vanguard had no problem with me being non resident for last 20 years.

Are you a US citizen?

If not a bigger concern could be that if you die while you have the accounts your estate could be hit with the ridiculously high non-resident alien estate taxes so it would also be good to look into that if you are not 100% sure that your estate will not be subject to that.

The OP is (currently) domiciled in the UK. The UK has an estate tax treaty with the US that raises the US estate tax exemption to a level equivalent to that of a US citizen.

[TedSwippet]

If you get anything useful from Schwab, please report back. Besides you and I, there will be others affected too. (Perhaps worth changing the thread title to something like "US nonresident alien : Vanguard ...", since Vanguard's [(removed) --admin LadyGeek] is not restricted to just UK residents.)

Replace with its dictionary definition: "dislike of or prejudice against people from other countries". Prejudice against non-US residents is exactly what Vanguard has decided to engage in.

Fifteen years ago I would have recommended Vanguard to anybody. Today, they are firmly on my [(removed) --admin LadyGeek]. How are the mighty fallen.

Replace with its dictionary definition: "a list of those whom one dislikes or plans to harm."

[bluejeansman]

Just got off a 1 hour phone call with Vanguard US. I have what appears to be very good news. The representative spoke to his seniors and other team members and told me unequivocally that my account will be transitioned to a brokerage account by end of 2025 and I do not need to do anything. I stressed the fact that I am a non resident alien and he said that should not be a problem. I asked again if I will be forced to liquidate my assets or move custodians and he said NO !

Well, this contradicts the letter that got sent out. I will call them again tomorrow because it does not sound right. But if true, I could not have asked for better news !!

On another note, spoke to Fidelity where I already have a Roth IRA and I may be able to transfer over my Vanguard Roth IRA if I wish to. I may have to be out of the market since Fidelity does not allow mutual funds for non residents.

It is the taxable account I am most worried about. Need to talk to Schwab.

It seems they have a way of converting mutual funds to ETF that does not trigger a sale.

I think the MF and the ETF are different share classes of the same fund so conversion is not taxable. I would inquire as to the applicability to you with VG and a tax advisor. Can you elaborate why you think it might not be applicable to you? If you were able to convert to an ETF at VG and then transfer to a brokerage that allows you to be a NR without triggering any tax, that would seem to be a possible solution.

I think I misunderstood this. They will be no conversion to ETFs. As the letter says : Going forward, Vanguard retail investors will need to use a brokerage provider (e.g., a Vanguard Brokerage Account) to purchase, redeem, and trade Vanguard mutual funds, because the legacy investment platform (where my mutual fund account resides) is going to be retired.

I am a UK naturalized citizen, originally from India. No US green card or citizenship. Lived in US almost a decade then UK for last 20 years. May go back to India for good, perhaps even next year.

Ideally want to be a global nomad. Spend the summer in Europe/UK. With the recent budget changes in India, long term (2+ years) capital gains tax of offshore equity mutual funds are taxed at 12.5% so, being India tax resident is not punitive if I want to keep a global equity tracker with Interactive brokers / Vanguard US / Etrade US / UK brokers such as Hargreaves, Interactive Investor, AJ Bell etc.

By the way, UK brokers also place some restrictions for non residents. HL have clearly said I cannot buy OEIC unit trusts (which is UK speak for mutual funds) but I can maintain existing holdings, and buy ETFs, no issues. The Vanguard US restriction seems to be similar, except that I seem to need a special "brokerage account" which according to the letter I will not be eligible to open as non resident alien, altho the latest phone call contradicted that. I need couple more calls with Vanguard US. Let us see if I get consistent info each time. Fidelity US has also been prohibiting me from buying mutual funds since last few years, only ETFs allowed.

Aware of US estate taxes, thanks. Not sure what will happen if I end up tax resident in India. But then again I have no heirs. My wealth will go to charity so estate taxes may not be a major issue for me provided I write my wills I guess.

If I relocate to India, I can probably use the first year RNOR window to liquidate everything and "reset my cost basis" if not entirely get out of all these US/UK accounts. That way if I am forced to sell and close out, at least the capital gains tax bill will not sting.

Will post updates once I clarify again with Vanguard, Fidelity, Schwab etc.

Thanks all for the great replies ! Very helpful !!

[bluejeansman]

If you get anything useful from Schwab, please report back. Besides you and I, there will be others affected too. (Perhaps worth changing the thread title to something like "US nonresident alien : Vanguard ...", since Vanguard's [(removed) --admin LadyGeek] is not restricted to just UK residents.)

Amended the title, thanks, TedSwippet !

[bluejeansman]

Maybe a little more in this thread: viewtopic.php?t=433099

Thanks a lot for that link, TedSwippet ! I totally missed it. Thats exactly my issue. Should have searched and replied there. My apologies, all !

[bluejeansman]

Unfortunately I missed this thread and started another one on the same topic today : viewtopic.php?p=8089408

TL;DR : I received the mail, called Vanguard, and they said I cannot open brokerage account as NRA. I had to get on another phone call so cut it short. When I called them in the evening they said everything is hunky dory and even if I dont do anything I will be "transtioned over" to the brokerage system by end of 2025.

[bluejeansman]

I gave it a try... . What the future holds for NRA's at Vanguard remains a secret.

LOL !

[LadyGeek]

I merged bluejeansman's thread into the relevant discussion. I also retitled the thread.

(Thanks to the member who reported the post and provided a link to this thread.)

[TedSwippet]

TL;DR : I received the mail, called Vanguard, and they said I cannot open brokerage account as NRA. I had to get on another phone call so cut it short. When I called them in the evening they said everything is hunky dory and even if I dont do anything I will be "transtioned over" to the brokerage system by end of 2025.

Which of the two completely opposing answers to believe? Will Vanguard change its mind again between now at the end of 2025? Adversely alter the deadline? Introduce more restrictions? Move the goalposts? Summarily evict NRAs entirely?

Vanguard repeatedly flip-flops on its decisions, and is relentlessly sloppy and unclear in its customer communications. Vanguard customer service reps rarely seem to know what they are talking about, and are prone to simply making up answers on the spot. Vanguard is no longer a professional or trustworthy provider. It is time to leave them.

[rkhusky]

I think I misunderstood this. They will be no conversion to ETFs. As the letter says : Going forward, Vanguard retail investors will need to use a brokerage provider (e.g., a Vanguard Brokerage Account) to purchase, redeem, and trade Vanguard mutual funds, because the legacy investment platform (where my mutual fund account resides) is going to be retired.

You can hold mutual funds on the brokerage platform. No need to convert to ETF’s.

[TedSwippet]

TL;DR : I received the mail, called Vanguard, and they said I cannot open brokerage account as NRA. I had to get on another phone call so cut it short. When I called them in the evening they said everything is hunky dory and even if I dont do anything I will be "transtioned over" to the brokerage system by end of 2025.

I'd strongly suggest that you phone Vanguard and get them to transition you now, rather than wait until the end of 2025.

That way, you will head off any changes in policy between now and the end of 2025. It will confront Vanguard customer service with the reality of actually doing this, rather than simply spouting whatever comes into their heads first, which (depressingly) seems to now be the normal case for most if not all NRA queries. If something is to go wrong here -- and I have found that there is regularly a reality gap between what Vanguard customer service says is possible and what is actually possible -- it would be better to know of it now, and with time to prepare, rather than in a crunch in December next year.

I realise that your ground state is procrastination :-). However, in this case I believe it really is worth tackling this directly now, and not waiting for an annoyance now to become a crisis later.

[typical.investor]

If something is to go wrong here -- and I have found that there is regularly a reality gap between what Vanguard customer service says is possible and what is actually possible -- it would be better to know of it now, and with time to prepare, rather than in a crunch in December next year.

I realise that your ground state is procrastination . However, in this case I believe it really is worth tackling this directly now, and not waiting for an annoyance now to become a crisis later.

I doubt Vanguard suddenly decided to permit NRAs to open brokerage accounts.

Most likely the customer service rep was just stating that *normally* would happen for those who don’t switch to brokerage now without realizing the restriction on NRAs.

I suspect accounts for NRAs will just be frozen with reinvesting, sales and withdrawals possible, but no new purchases of anything.

I had accounts frozen at Vanguard for years (529 plan and annuity). I was able to ACATs out and moved the accounts out that I wanted to rebalance/invest more in.

Maybe just figure out how to live with those restrictions, and vest new money elsewhere.

[TedSwippet]

I doubt Vanguard suddenly decided to permit NRAs to open brokerage accounts.

Most likely the customer service rep was just stating that *normally* would happen for those who don’t switch to brokerage now without realizing the restriction on NRAs.

Indeed. That's the gist of my recommendation. Find out now, don't wait. Vanguard customer service is more often than not, to use the vernacular, "full of it". Depressing for a company that was at one time head and shoulders above their competitors. No longer.

Maybe just figure out how to live with those restrictions, and vest new money elsewhere.

Right, but as noted upthread, not only are Vanguard entirely unclear on the details of these restrictions (dividend reinvestment, RMDs, etc), but options to go elsewhere may be limited or non-existent. Aside from perhaps a slim chance with Schwab, as yet untested and unverified, I don't know of any other US provider that will open new accounts for NRAs either.

[nun]

It seems to me that there's nothing new in all this. The OP has just become aware of the situation that applies to US non-residents and US citizens without a US mailing address and Vanguard has been requiring people to move over to their new brokerage platform for at least a year now. The OP could do nothing and still be able to implement a strategy to sell their funds taking their taxes into account.

[jebmke]

It seems to me that there's nothing new in all this. The OP has just become aware of the situation that applies to US non-residents and US citizens without a US mailing address and Vanguard has been requiring people to move over to their new brokerage platform for at least a year now. The OP could do nothing and still be able to implement a strategy to sell their funds taking their taxes into account.

and based on the post above yours, VG may not be an outlier.

[nun]

It seems to me that there's nothing new in all this. The OP has just become aware of the situation that applies to US non-residents and US citizens without a US mailing address and Vanguard has been requiring people to move over to their new brokerage platform for at least a year now. The OP could do nothing and still be able to implement a strategy to sell their funds taking their taxes into account.

and based on the post above yours, VG may not be an outlier.

Yes, similar issues will arise with transactions involving US domicile funds and US non-residents. The OP is in a better situation than many US citizens as at least they can sell and reinvest their money outside the US without worrying about PFIC.

[bluejeansman]

Wanted to provide an update regarding a highly encouraging call with Schwab International. I called them and requested someone to call me back. Got a call back from a refined gentleman from London office. But this was Charles Schwab international.

He confirmed that they are able to move my Vanguard mutual funds in specie over to Schwab for both my taxable account And Roth IRA. He said I would need to open a Roth IRA with Schwab. I re-iterated that I am a non resident alien and not a US citizen but he reassured me that I will still be allowed to open a Roth IRA. I will not be allowed to buy US domiciled assets due to PRIIP but I can transfer existing assets without being forced to liquidate them. The transfer itself is free. Any further trades of stocks / UCITS ETF will be $50 per trade.

The account will be domiciled in US and held in USD. It will not be considered a remittance into UK (A point which is important for me due to old reasons).

If this works out, I may consider transferring my Etrade US account also over to Schwab. Customer service in Etrade is not great either.

Schwab customer service was too good so I asked him whats in it for them. He then mentioned the wealth management service but no pressure to go for that. I could move Vanguard funds for free and just maintain it. I did not ask about reinvesting dividends. I will just buy UCITS ETF with the dividends.

happy to share by PM the email/contact of the senior investment consultant I spoke to. Let me clarify the above points in writing and provide another update.

I have not called Vanguard since my last post here. Maybe worth at least one call to re-clarify the options.

Thanks for all the replies.

[typical.investor]

Schwab customer service was too good so I asked him whats in it for them.

I happily used Schwab International for years. Schwab's business models is to have cash in your account earn little and for UCITS they could be bought cheaper at IBKR (international brokers) which also has better margin and currency conversion rates. So they aren't the absolute cheapest, but have been more competent than Vanguard and Fidelity in my experience. They also are easier to use than IBKR and have better customer service.

For other NRAs, I point out that the ability to open accounts at Schwab International depends on the country of residence. I was not able to open a IRA for my spouse when we resided in a country that restricts Schwab International from doing so. Thus, this is not a solution for everyone everywhere. IBKR is much more able to open accounts in nearly every country, but they do have restrictions on opening tax deferred accounts for residents of many places.

[Else]

Wanted to provide an update regarding a highly encouraging call with Schwab International. I called them and requested someone to call me back. Got a call back from a refined gentleman from London office. But this was Charles Schwab international.

He confirmed that they are able to move my Vanguard mutual funds in specie over to Schwab for both my taxable account And Roth IRA. He said I would need to open a Roth IRA with Schwab. I re-iterated that I am a non resident alien and not a US citizen but he reassured me that I will still be allowed to open a Roth IRA. I will not be allowed to buy US domiciled assets due to PRIIP but I can transfer existing assets without being forced to liquidate them. The transfer itself is free. Any further trades of stocks / UCITS ETF will be $50 per trade.

The account will be domiciled in US and held in USD. It will not be considered a remittance into UK (A point which is important for me due to old reasons).

If this works out, I may consider transferring my Etrade US account also over to Schwab. Customer service in Etrade is not great either.

Schwab customer service was too good so I asked him whats in it for them. He then mentioned the wealth management service but no pressure to go for that. I could move Vanguard funds for free and just maintain it. I did not ask about reinvesting dividends. I will just buy UCITS ETF with the dividends.

happy to share by PM the email/contact of the senior investment consultant I spoke to. Let me clarify the above points in writing and provide another update.

I have not called Vanguard since my last post here. Maybe worth at least one call to re-clarify the options.

Thanks for all the replies.

Recieved THE letter today in the mail and called Vanguard. I was told the following: the only Information that customer service has at this time is, that at the end of 2025 accounts can only be closed or transferred to another service provider. I am a German NRA. If you are not permitted to open a brokerage account, your account will not be moved to the new platform. I had hoped to use the account with restrictions in the future. That will not be the case. I had contacted Schwab international last year and will move there, if it is still possible. I am planning to open the account this year and will fund it at the beginning of the next year. I want to ensure that the year end dividends get taxed under treaty rules. It might take a bit longer to set the new W8ben up. Vanguard took nearly 2 month last time I renewed it. I am regretting not having moved to Schwab last year. I cannot believe Vanguard did this. Lots of resident Aliens live in the US. Occasionally lifes change. Resident Aliens should
be warned not to invest with Vanguard. The thread title should be updated. According to the Information given to me on the phone today , the accounts will not be frozen. NRA's will have to close the account or transfer to a different provider.

[bluejeansman]

Vow thats shocking customer service from Vanguard ! The least they could have done is allow customers to keep the accounts and only let them sell any existing holdings at a time of customer's choosing but not be able to buy new holdings of mutual funds, since mutual funds are typically for residents.

Being in the UK, that would not surprise me. I had similar frustrating conversations with Alliance Trust in UK when I was considering moving to India. Initially they promised complete flexibility if I became non resident. Then they changed the story. Finally I got a reasonably professional altho' very curt customer service agent and she clearly told me that I can hold and sell existing mutual funds (called OEIC unit trusts in the UK) but cannot buy new units of any OEIC unit trusts as a non resident. But she also said shares and ETFs were allowed. This position is fairly consistent in the UK.

Hargreaves Lansdowne confirmed this when I checked with them a few months ago (i.e buying shares and ETF would be ok but not OEIC unit trusts, selling is ok tho, can maintain ISA, General Taxable Investing account, SIPP (pension)). AJ Bell and Interactive Investor (Alliance Trust was acquired by them) are now saying they will allow me to buy OEIC unit trusts even after I go away from UK and become non resident, but I doubt it, as it sounds too good to be true. But I am fairly sure they will all allow me to maintain the account, sell existing holdings and buy ETFs. So, its not so bad. India might put some silly restrictions on ETFs that hold a teeny tiny bit of India in them but I guess there are ways to work around that.

Vanguard UK was interesting. They said if I become non resident, I can maintain my account provided I have a UK phone number (I suppose this can be a VOIP number, I asked and they did not specifically reply to that) and sell existing holdings but cannot buy new units or ETFs. They were quite reluctant about non residency. They basically said "Look Vanguard UK is for UK residents. It is not really meant for non residents. You can look to other providers and get the same Vanguard funds/ETFs".

I posted about this here : https://www.reddit.com/r/FatFIREUK/comm ... ?context=3

Sorry for digressing. Coming back to Vanguard US, I hope I can switch from VTSAX (Total US stock market) to VWSAX (world Stock market) inside my Roth which I have been meaning to do for a while. I hope this will work since the freeze is only later next year. If it allows me to do it online I guess it will go thru ? Will I get the dividends tho ? The last dividend payment for VTSAX was on Sep 30. I am supposed to get the next one on Dec 31. If I switch in the middle, I hope I will get the dividend for the month of October. The way one of the forum members here explained dividends was (thanks) : The NAV of the fund keeps increasing and on the dividend date (using it as a loose term) the money gets paid out and the NAV of the fund reduces by that dividend amount. This is the way it works in UK. Not sure if it is the same in US.

Vanguard has a new CEO Mr.Salim Ramji : I was thinking of writing to him about this shocking treatment of non residents. Can we reach out to him on Linked In or X ? At least someone needs to hear our story. At the very least they should allow us to maintain the accounts not be forced to liquidate / close out. Takes a very long time to build a reputation and goodwill but takes a very short time to destroy it. Hope they understand this.

[Else]

I hope this will work since the freeze is only later next year.

What makes you think your account will be frozen? I was told on the phone today, that there are two options only: closing my account or transferring it to another service provider. Leaving it in a frozen state was not an option. And I am not talking chemistry or cooking. Sorry for the sarcasm.

[bluejeansman]

I hope this will work since the freeze is only later next year.

What makes you think your account will be frozen? I was told on the phone today, that there are two options only: closing my account or transferring it to another service provider. Leaving it in a frozen state was not an option. And I am not talking chemistry or cooking. Sorry for the sarcasm.

Sorry I should have used the word damage instead of freeze in that sentence. What I meant to say is : there seems to be no restrictions at the moment so I could perhaps use the opportunity to move into Vanguard funds of my choice. US Total stock market is good enough and will probably continue to outperform the rest of the world but I would like to move to World stock index. I can do this within the Roth IRA without any tax penalties. Once I move to Schwab I will probably not be allowed to buy any US domiciled mutual funds. Altho I am a UK naturalized citizen and based in UK for now, US domiciled mutual funds are probably a no-no for me as a NRA especially since I may move to India for good, but since I have no heirs and my wealth goes to charity, estate tax may not be a major issue. I need to check this point with a tax guru tho'. Estate tax issues for NRA notwithstanding, US mutual funds inside a tax-sheltered account are slightly better from a tax drag standpoint compared to UCITS ETF since UCITS ETF pay 15% tax to US on US stock dividends (thanks TedSwippet). Roth IRA is a recognized tax shelter in the UK and very likely to be respected in India too as per the tax guru in Mumbai I spoke to.

Sorry that was long. Right now I can only pray Schwab comes to my rescue

[TedSwippet]

I hope this will work since the freeze is only later next year.

What makes you think your account will be frozen? I was told on the phone today, that there are two options only: closing my account or transferring it to another service provider. Leaving it in a frozen state was not an option. And I am not talking chemistry or cooking. Sorry for the sarcasm.

Hmm. Does your letter say the same as ours? Specifically, does it end with?:

If your account remains open on our legacy investment platform by the end of 2025, it will be restricted to prevent any transactions other than withdrawals or transfers of assets to another firm.

In summary then, so far we have received all of the following from Vanguard:

1. Written communication stating that: (a) brokerage transfer is not possible; (b) the account can remain at Vanguard, but restricted.
2. Verbal information from Vanguard customer service that brokerage transfer is possible. Contradicts (a) above.
3. Verbal information from Vanguard customer service that the account cannot remain at Vanguard. Contradicts (b) above.

Clearly at least one of these is wrong. Maybe more than one. Maybe all three. The question is, which is right, if any? Vanguard's customer service is hopeless, but then, Vanguard's written communication is as well, so really there's no way of telling. On top of which, even with a straight and reliable answer (apparently a unicorn), there is no guarantee that Vanguard won't change their minds on any or all of this (doubtless to customer detriment) in the next 14 months.

Vanguard has a new CEO Mr.Salim Ramji : I was thinking of writing to him about this shocking treatment of non residents. Can we reach out to him on Linked In or X ?

Perhaps try email. Vanguard seems to operate a "firstname_lastname@vanguard.com" email structure. Might work. Or replace the underscore ("_") with a period ("."). Failing that, making some noise on LinkedIn or X might elicit a response.

The problem, of course, is that on social media you are unlikely to get a groundswell of others to help you along. 99.999% of Vanguard US's customers are US residents, and they won't give a fig about any problems Vanguard is throwing at NRAs. (Actually, you can expect some to gloat, since NRA accounts probably take proportionally slightly more of Vanguard's time and resources than normal, so that getting rid of NRAs could lower everyone else's costs a tiny bit.)

At least someone needs to hear our story. At the very least they should allow us to maintain the accounts not be forced to liquidate / close out. Takes a very long time to build a reputation and goodwill but takes a very short time to destroy it. Hope they understand this.

I am sure Vanguard understands this perfectly well. The open question is whether or not they care. My guess is, not at all. NRAs will be such a small part of their customer base that it will be immaterial to them how much trust we have, or do not have, in Vanguard.

[bluejeansman]

This is now on X (formerly Twitter) : CEO has been copied.

https://x.com/bracknellbalaji/status/18 ... 4782893215

[bluejeansman]

Spoke to another Vanguard representative just now. He confirmed that my account cannot be moved to a brokerage account since I am a non resident alien.

However the account going into a "frozen state", or rather dormant state where I can only sell my holdings at a time of my choosing seems to be an option. I read out the line from my letter : If your account remains open on our legacy investment platform by the end of 2025, it will be restricted to prevent any transactions other than withdrawals or transfers of assets to another firm. and asked him what "withdrawals" means and whether it means that in the scenario where I am unable to transfer to another provider, will I be forced to withdraw everything from Vanguard in a single run ? I explicitly asked him if I can sell and withdraw in small amounts whenever I want to, and he said that is certainly possible.

Maybe I will write to them and explicitly get this in writing. See where it goes ...

[bluejeansman]

There is no "compose" button to send a secure message on vanguard.com. Wasted my time typing up a mail on my editor in the hope of sending it. There are a few threads on this forum with people being unable to email customer support. There was a suggestion to use "Upload documents" to get around it but I cannot find that either.

Obviously they dont want to get emails from customers. Too late in the evening to muck around with this.

[lurkman]

Another data point:

I am a US citizen but my Vanguard account was opened many years ago, when I was a foreign national.

I ignored for many months the Vanguard email messages asking me to change over the legacy account to a brokerage account. I had successfully opened a brokerage account many years ago on Vanguard though I also had a legacy account with mutual funds.

I don’t think it ever occurred to me to update my citizenship status on my Vanguard account.

A couple of months ago, when I finally attempted a transfer of my legacy account to the brokerage account, the conversion would not go through, though a brokerage account already existed and had been created many years before.

When I called Vanguard, they flagged my citizenship status which was still showing a non US status. I asked them to update it, which they did, and the transfer was completed without any further issues.

So, it seems the Vanguard system does block the conversion of non-citizen accounts and special handling would be needed, regardless of what some not-so-knowledgeable Vanguard customer service provider may tell you.

I hope you and others affected by this quirk find a solution either at Vanguard or a different provider like Schwab or Fidelity.

[Maple]

This is now on X (formerly Twitter) : CEO has been copied.

https://x.com/bracknellbalaji/status/18 ... 4782893215

This is an interesting approach. I wonder if Vanguard will directly reply, and how many other useful comments your post will generate?

[Else]

I explicitly asked him if I can sell and withdraw in small amounts whenever I want to, and he said that is certainly possible.

I asked the same question. However, I was told that it is not possible to withdraw over time. I was told in no uncertain terms that I would have to withdraw funds or transfer to a different provider after 2025. The woman adviced" I would transfer sooner than later". I also asked, if I could not transfer immediatley in 2026, could I still submit a W8ben by mail or online. She checked with her team. The answer was that there will be no structure to provide for that service. Yes, Vanguard communication has been unclear in the past. But this is a new dimension. If it would be possible to keep a frozen account, they could have communicated that at this time using that terminology. But they did not. Instead, at least in my case, I was told on the phone to leave now. No, I did not speek to Callcenter in the Philippines.

[TedSwippet]

I asked the same question. However, I was told that it is not possible to withdraw over time. I was told in no uncertain terms that I would have to withdraw funds or transfer to a different provider after 2025. The woman adviced" I would transfer sooner than later". ... Yes, Vanguard communication has been unclear in the past. But this is a new dimension. If it would be possible to keep a frozen account, they could have communicated that at this time using that terminology. But they did not. Instead, at least in my case, I was told on the phone to leave now.

This definitely transcends the usual Vanguard poor communication, and if taken at face value, may well be negligence, perhaps even in the full legal sense. Maybe try filing a written formal complaint with Vanguard, so that this gets past their uninformed and useless customer service agents and up to someone who may have more or better information, and perhaps more influence within Vanguard.

I'm wondering if there is anything country-specific in this. Both bluejeansman and I are in the UK; you are not. Perhaps Vanguard plans a different approach across countries? Just a vague thought, since what you hear seems totally at odds with what we think we know so far. (Although, from the sound of things, Vanguard have now gone back on their earlier statement to bluejeansman that he can transfer to brokerage. I am continually amazed at how clueless Vanguard's customer service agents are.)

... could I still submit a W8ben by mail or online. She checked with her team. The answer was that there will be no structure to provide for that service.

Predictable, sadly. It sounds like they want to dismantle the entire mutual fund only structure, leaving only brokerage. That means losing any W-8BEN handling. Probably all online access too, with only phone available. I imagine even no more annual statements. Retirement accounts are supposed to be sources of financial safety. Vanguard have managed to turn them into huge sources of stress.

Weirdly, for UK and Indian residents, future lack of a W-8BEN feature at least is no additional detriment. Vanguard has already said that for these people, it will not honour W-8BEN withholding reductions anyway.

[Else]

Weirdly, for UK and Indian residents, future lack of a W-8BEN feature at least is no additional detriment. Vanguard has already said that for these people, it will not honour W-8BEN withholding reductions anyway.

Do you have information, if Schwab international is handling this differently?
Yes, I am in Germany. Perhaps country makes a difference, or the type of account. My Vanguard account is taxable, my 403b is with Tiaa. I might write. But what am I willing to believe. I could also read my tealeaves this morning.

[ozziem]

Australian citizen/resident here and just received the email notification from Vanguard a few days ago.

Honestly, a "restricted" account as they briefly describe it (surely it needs more detailed terms and conditions to be a real thing?) would be totally fine for my needs. My concern is with the unwritten details and with what else might change between now and when I had planned to begin drawing down these retirement accounts (approx 9 years).

This is extremely disappointing. It was precisely because of the way that Vanguard used to operate, and the experiences of other non-resident aliens reported on these forums, that I chose to leave retirement savings with them when I left the USA almost 15 years ago.

I am almost inclined to call Vanguard Australia (since this is what the email suggests that I do!) as they may actually provide some service. However, given that my accounts are US-specific Roth IRA and Rollover IRA, I don't really expect there to be any appealing solutions.

[bluejeansman]

Just noted that @SalimRamji_sol handle does not have a 'Verified' blue tick. Ok, its not the CEO. @Vanguard_Group is the correct handle allright but I dont think anyone bothers to reply on that.

Email might be an option.

To give another example, I had absolutely pathetic customer service from O2 mobile in UK. I was in India at the time hence could not visit an O2 shop. Kept getting bounced from call centre to call centre in India, Bangladesh, Nigeria you name it. Inconsistent messages, tall promises but no delivery. I escalated to the O2 community online forum. There is a guy named Dave there (maybe O2 employee, maybe an evangelist with good connections). He reached out to O2 and sorted it out in 3 days.

Customer facing staff are paid minimum wage, given no training. Increasingly frequent problem all over the world.

[bluejeansman]

May be a good idea to contact Matthew Benchener, managing director of Vanguard Personal Investor, member of Executive Leadership team. He is on Linked In.

https://corporate.vanguard.com/content/ ... -team.html

[TedSwippet]

Weirdly, for UK and Indian residents, future lack of a W-8BEN feature at least is no additional detriment. Vanguard has already said that for these people, it will not honour W-8BEN withholding reductions anyway.

Do you have information, if Schwab international is handling this differently?

Nothing on Schwab. I would hope that they are more sensible and grounded than Vanguard. Definitely something to check carefully there before jumping, though.

For the moment, Vanguard's refusal to honour W-8BENs is purely specific to the UK and India, and as far as I know, also purely specific to Vanguard. It comes from special clauses in those countries' US tax treaties, related only to 'lump sum' 401k and IRA withdrawals. Specifically, the US may not tax 401k and IRA withdrawals for UK and Indian resident NRAs, except if the withdrawal is a 'lump sum'. Nowhere however is the term 'lump sum' defined, and so Vanguard has unilaterally (and deeply unhelpfully) chosen to define it as any and every withdrawal, including (insanely) Roth withdrawals.

Of course, the fact that Vanguard has already stated that they will not recognise W-8BEN forms only for UK and Indian residents will not be any help for you in Germany after 2025, when Vanguard will apparently no longer recognise W-8BEN forms for any nonresident alien.

My concern is with the unwritten details and with what else might change between now and when I had planned to begin drawing down these retirement accounts (approx 9 years).

That's the worry, isn't it? What Vanguard didn't say is at least as threatening as what they have said (and then unsaid, and then said again, and then worsened, and then ...) What comes next? It is only a short step from a 'restricted' account -- if that is even possible -- to being summarily evicted.

My guess is that Vanguard Aus will not give you anything useful. As you say, these are US-specific accounts, and Vanguard Aus will have no way of managing or running them. Neither can you transfer a 401k or an IRA into any other country's own retirement system; the US is fully Balkanised in that respect, so no QROPS or similar. Vanguard's suggestion to talk to Vanguard Aus is just a cop-out.

[Else]

Initiated a secure Chat with vanguard. I asked specific questions about my account on the legacy platform after 2025 as a NRA ( referenced the letter): 1. Is Withdrawal over time possible? 2. W8ben , Treaty rates.3. Dividends rederict and reinvest.4. Ach and wire withdrawals

Here the answer: " apologize I am not finding any
definitive answer to you ques-
tion. We don't have an official
answer to your question as of
yet."