Buy Offshore Real Estate in Your Retirement Plan…and Get A Second Passport!

admin (February 9, 2010)

As you may have read in last week’s A-Letters, there’s a growing threat that cash-hungry politicians might make a grab for your retirement savings. (Read the full report here).

Today, I’m going to offer a possible solution; one that could actually solve a number of your problems and broaden your horizons and opportunities beyond what you previously thought possible…

You see, if you’re an American, then one of the best ways to internationalize your pension or retirement plan is to use it to purchase offshore investments, including offshore real estate. It’s perfectly legal under U.S. law, although finding a cooperative custodian willing to let you buy the offshore investment is often a problem.

One of the best-kept secrets of this strategy is that if you use your retirement plan to purchase real estate in the Confederation of St. Kitts & Nevis, you can leverage your investment to also obtain a second passport.

You must purchase “qualifying” real estate on one of these islands, but there are numerous developments from which you can choose. The minimum value of a qualifying property is $350,000. Taxes and fees add a minimum of $90,000 to this cost, and you’ll need to pay them out of your own pocket, not your retirement plan.

This strategy works for self-directed IRAs and 401(k) plans, along with some defined benefit plans. It won’t work if your plan prohibits offshore investments. However, the overwhelming majority of the time, there’s no such prohibition—the plan administrator simply doesn’t want to make the effort to provide an offshore option.

Are there any catches? Yes, but they’re easily managed.

The first is that you can’t live in property you purchase through your retirement plan. You can rent it out, though, and any income generated accumulates on a tax-deferred basis. When you retire, you can make a distribution of the property to yourself and then live there, if you so choose. This is a taxable event if you funded your plan with pre-tax dollars. In addition, if the rental income during the deferral period exceeds maintenance and other ownership costs, you’ll pay tax on that income as well.

The second catch is if you’re obtaining a St. Kitts & Nevis passport in preparation for eventual expatriation—loss of U.S. nationality and passport.

If you expatriate, the “exit tax” law enacted in 2008 penalizes investments in retirement plans. Depending on what type of plan you have, you may have to pay tax on all pre-tax dollars in the plan when you expatriate. Alternatively, the plan administrator may have to withhold up to 51% of the untaxed portion of the plan when you receive a distribution. However, these taxes apply no matter what assets you own in your retirement plan if you expatriate. So, you’re no worse off investing the funds in a St. Kitts & Nevis property than you would be otherwise.

If you’re interested in this strategy, send me an e-mail message at info@nestmann.com. My firm can assist you with executing it, and help you expatriate as well. To learn more about expatriation, check out my BILLIONAIRE’S LOOPHOLE report in the bookstore on my Web site, www.nestmann.com.

Sincerely,

Mark Nestmann

Wealth Preservation & Privacy Consultant

Tags: Asset Protection