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We are both US and Italian citizens. We are planning to move…

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We are both US...

We are both US and Italian citizens. We are planning to move to Italy and become legal residents there (we do not want to renounce our American citizenship) but would like to keep our IRA. Can we maintain the IRA in an American bank and simply pay the RMD every year? Some think you cannot have an investment account if you are not a resident in the US, is that true?

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

He is under the impression that we would have to cash in the IRA to transfer it to our Italian bank and obviously may an enormous tax but he admits he is not an expert. I guess my question is , is it legal to maintain an IRA with a US bank if we are not residents?

Submitted: 29 days ago.Category: Tax
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3/23/2018
Tax Professional: Tax.appeal.168, Tax Accountant replied 29 days ago
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Tax Professional: Tax.appeal.168, Tax Accountant replied 29 days ago

You do not have to cash in the IRA unless you want to. As a U.S. citizen, you are able to maintain your IRA here in the U.S. SEE BELOW:

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If you live abroad as a U.S. citizen, you are still required to file an annual income tax return, and taxes imposed on your IRA distributions will be the same as though you were living in the U.S. That is, distributions from a traditional IRA taken after you reach age 59 1/2 will be taxed as ordinary income, and distributions from a Roth IRA taken after you reach age 59 1/2 with the plan in effect for at least five years will be tax free. With the exception of special circumstances allowed by the IRS, distributions taken before that time from either plan would be subject to taxation and an additional 10 percent penalty on the untaxed portion. The same would apply to someone who qualifies as a non-resident alien and who participated in a U.S. IRA.

REFERENCE SOURCE:

https://finance.zacks.com/happens-united-states-ira-retire-different-country-5750.html

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