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Hi all! I'm just hoping by some miracle someone might be able to help me with an issue my mom is having with a traditional IRA she just inherited (now a beneficiary IRA).
My mom is a US citizen and owns property in Washington state, technically making her a legal resident of WA, and has checking and savings accounts at Bank of America. However, she is currently residing in Canada most of the year.
She just inherited a tradition IRA that is held at a small investment company. When my grandma named my mom as beneficiary she used my mom's Canada address. So now the investment firm is refusing to work with my mom at all. They are telling her she cannot keep the IRA with them, and that she actually cannot keep the IRA in the US at all, they're claiming the money HAS to be sent to Canada.
The problem is that Canada does not have IRAs, there's no such thing as an IRA in Canada. So if my mom cannot keep the money in an IRA here in the US she basically has to cash the full amount out and will take a big tax hit on it. She finally agreed then to just cash it out and take the loss but then the investment firm said they cant just cash out the account and give her the money directly, they're saying the money HAS to be sent directly to a bank in Canada.
So my mom checked with her bank in Canada and the bank called the investment firm about getting the money transferred there. The problem then is that the money in the IRA is currently invested in some kind of US bonds (and something else I don't remember), and the investment firm is saying they cannot sell the bonds and send the cash to Canada, they claim they can only send the IRA intact, as in they want to send the bonds to Canada. However, banks in Canada do not deal with US bonds! So the Canadian bank is saying they cant accept the IRA intact invested in US bonds, they'll only accept cash.
The investment firm is refusing to help my mom at all, they are giving her no options. She basically has no way of getting the money. They wont give it to her directly and they wont sell the investments so they can send the cash to the Canadian bank. Now shes in a panic because its $140,000 and she has no way to get it.
She has called numerous banks and investment firms in Canada and they all said they've worked with American citizens before and never had these kinds of issues having US accounts transferred up there. They said other Americans have been able to have their US investments sold and had the cash sent to Canada with no problems. So far the US investment firm holding the IRA has made a lot of mistakes with the paperwork and don't seem to ever know whats going on and cant answer most of my moms questions. I'm wondering if they even know what they're doing, if maybe they're wrong about all this stuff they're telling her.
She checked with Bank of America about moving the IRA there and keeping it in the US, but they said she has to spend at least 6 months of the year in the US. My mom doesn't normally spend that much time in the US though. She could lie and say she does but shes nervous about doing that.
Does anyone have ideas on this situation? Does anyone know of a bank or investment firm in the US that would allow her to keep the IRA here in the states? Is there a real reason why this investment firm refuses to sell the investments or give the cash to my mom?
Please share any advice you may have. Any help on this would be greatly appreciated! Thank you so much!
There are quite a few articles out there. You should be able to get some basic info on how it works, but be careful about the sources. Hopefully one of the articles will lead you to some official government source on this.
There seems to be different rules based on if one has given up US citizenship or not. Perhaps that's why the bank is confused.
The lesson, here, is if you move from one country to another maintain a local address for banking in the country from which you moved. It is not against any US law, at least, if you follow the tax laws of both countries. For example, US citizens (including dual citizens) are taxed on their world-wide income. If they move to a country that has a similar practice, then you have to use foreign tax credits from the higher tax country to offset your US taxes. No matter who gets what, you pay a total amount equal to the higher tax!
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