The Little-Known $500,000 Retirement Loophole

“Well, Ted, it sounds like a great idea, but where am I gonna come up with that kind of money?”

This is a common rebuttal from my Global Citizen clients every time I explain the opportunity to invest retirement funds through a European brokerage… Their eyes go wide, and even if they don’t say it out loud, I can see the wheels turning in their minds: How is this possible… and why didn’t I know about it?

US law gives holders of retirement accounts like IRAs and 401(k)s big tax benefits. You can either contribute money to them pre-tax and pay tax when you withdraw (normal IRAs), or pay tax when you contribute, and none when you withdraw (Roth IRAs).

In return for those tax benefits, the US government requires that your retirement funds be placed with a US-based financial institution, called a custodian. Whether it’s a bank or a specialized brokerage, the custodian’s job is to ensure that taxes are paid, and reports submitted accurately and on time.

But the law doesn’t require the custodian to manage or even hold your money. If the custodian lets you, you can invest your money yourself, anywhere in the world. With a self-directed IRA (SDIRA), you can get out of the typical financial sandbox of mutual funds, bonds, and individual stocks. You can invest in things where you have expertise and make far better returns than in the stock market. Examples include oyster farms, racehorses, and foreign real estate. As long as you follow the rules, this is all fine.

But you don’t have to manage your own investments with an SDIRA. You can ask someone else to do it.

And that someone else doesn’t have to be in the United States.

For example, I have close working relationships with asset managers in Switzerland who specialize in US clients. This is a rarified business, since the US keeps close tabs on where its citizens park their money offshore. The Securities and Exchange Commission certifies my Swiss friends to be fully compliant with US tax and reporting laws. That means they can open an account for you at Swiss banks… accounts that wouldn’t be opened if you approached them on your own.

Investing through a European brokerage opens up a world of opportunities. The biggest is that you’re out of the dollar. My broker friends invest in the Eurozone, in Asia, Latin America, anywhere that’s legal. They can hold investments in multiple currencies. They can put some of it into secure precious metal storage. They can do all sorts of things that you wouldn’t be able to do on your own, whether in Europe or at home.

For example, let’s say you moved €500,000 into a Swiss account exactly two years ago. Even if you didn’t invest that money at all, just let it sit in the bank, that account would be worth $613,243 today. By contrast, $500,000 kept in a US bank for the same period would be worth only $545,121. That’s 12.5% more gain, simply by being invested in the Euro.

But the required minimums to enjoy these benefits aren’t cheap. You need at least $500,000 of investable assets to open a Swiss account for your retirement funds. But many people have this much and more in their IRAs and 401(k)S. The only thing that’s stopping them from moving their retirement funds out of the US and out of the dollar is a lack of knowledge about the opportunity.

This is where I come in. I’ve been helping people navigate this opportunity for over a decade. I’ve seen dozens of people take advantage of the opportunity to spread their wealth geographically, as I recommended in yesterday’s article. I explain how it works. I make the introductions to these specialist brokers in Zürich. I hold their hands, metaphorically, while they agonize over the decision to do something so unusual, but so profitable.

Global diversification means many things. It doesn’t have to exclude your retirement kitty. So, if you want to take advantage of this opportunity, get in touch, and let’s talk.