Fidelity InvestmentsFidelity Investments is an American multinational financial services corporation. It is one of the largest mutual fund and financial services groups in the world. It was founded in 1946 and serves North American investors.
In the following it can be seen that Fidelity Investments directs U.S. persons who do not live in America to its international investment site:
Open an AccountThis site is for U.S. residents with a valid U.S. address. Not a U.S. resident? visit our International Investment site.
At its international investment site, it informs U.S. persons that they are denied services at this site.
International Investment siteFidelity does not offer these products or services outside their intended countries or regions, and purchase orders from U.S. investors will not be accepted
As such, Fidelity Investments are available to everyone except for American citizens living abroad, it appears.
So, I called to inquire on the matter. First, I was told that they do not accept foreign addresses. Yet, when I explained that I was an American citizen who does not live in America and that I was denied services at the international site, I was informed that I can open up a US investment account from within the US using my foreign address, or I would have to do so via international snail mail. Sadly, in the year 2012 with all the latest and greatest tech gadgets and possibilities, everyone but American citizens living abroad can open up an account using the internet.
What are the downsides of using a relatives home address located in the US. what could be the legal action can be taken against you if this is discovered by IRS…
I´m thinking it would be much easier to buy a cheap summer home in FL, since the rates are low and home prices are down and use that address. Wouldn´t that be the same as using a relatives address since it wouldn´t be my primary address.
I have the same problem with Fidelity as everybody on this forum.
I just called Charles Schwab International, following aysee’s advice.
When I said I lived in France, they told me they cannot open an account for me.
They also said it’s not a matter of citizenship, but a question of residency.
So it seems the only solution to open an account is to declare a US address. AS for me I could give a relative’s address in MA
What are the implications, though? Does it mean I have to file MA State taxes? My account with Fidelity is just an IRA. I do not have any income in the the US.
Can someone scan a copy of the letter and post it on dropbox/imgur, etc?
I’ve been living in Germany for the last year, but my Fidelity account has my parent’s address in San Diego. I’ve been fairly active in trading, since I’m currently unemployed, but I still file German and US taxes, I have no interest in cheating. Just this week I was considering changing my address to Germany, since I want to sever all ties with California to avoid state tax, any advice?
This has been posted at IBS elsewhere already, but I thought a reference to it on this post may be helpful as well:
US institutions to expats: ‘Take your retirement account elsewhere – now’
http://www.international-adviser.com/news/tax—regulation/us-institutions-to-expats-take-your-retirement
Looks like I got the dreaded letter. Really crazy as after 7 years with them they would decide to just dump me because of the hassle. Can everyone or anyone confirm that if you have a US address this will not mean any legal implication from a state tax perpective?
@John, I also worry about this but am going to try and maintain a U.S.-based account at least till my parents have passed on…but in a worst case scenario, would probably have to open an expensive dollar-based account where I live, such as with Citibank. I also wonder if my US-based account will be closed if they find out I’m no longer a U.S. citizen, having renounced earlier this year…I assume that I could still use my mother’s address because I’m sure that many former citizens must still have or share ownership of U.S.-based property.
@monalisa1776….I am sure this has already been discussed but when you renounce what was the exit tax like? Is it true that everything is considered sold and you pay a capital gain tax?
@John, yes, but only when one is worth 2+ million or in a few other situations. I’d guess that I’m exempt for being a former dual citizen with a negative net worth, but the IRS is still processing my paperwork, or hasn’t even looked at it yet.
@swisspinoy….any idea if that $2Million is inclusive of your property ownership overseas?
John. That is an oversimplification. Firstly you are only liable to an exit tax if your assets are more than 2 million . Secondly, you are only liable for taxes on gains more than 600k.
@KalC….thank you for this and looks like will have to talk to lawyer if I moved down this path.
I was just notified by Fidelity that I cannot even make trades within an existing IRA account because of my foreign address… Crazy. And yes, my US citizenship is no help apparently.
Is it as simple as putting my address on file to be back in the USA? Do I have to pretend to be living there and convince someone? Crikey!
Someone had posted that they were a Fidelity customer and had received a letter about their account and the ability to hold mutual funds. I’ve just received the same letter and called Fidelity and, separately, Charles Schwab UK to get a better understanding.
As I understand it, if you have a tax deferred or individual account with Fidelity, you will no longer be able to trade US mutual funds. You can hold what you have and reinvest dividends but you can’t initiate new positions. This is driven by the fact that US mutual funds are not registered for sale anywhere but in the US and both Fidelity and Charles Schwab have concluded that selling a US mutual fund to a UK or Italian or Japanese resident (even if they are a US citizen) could constitute a violation of local securities laws.
As I understand it, you can still buy and sell anything that is listed on an exchange including shares, bonds and ETFs. In effect, you either have to make the investment decision yourself (shares, bonds) or invest in a passive investment strategy (ETFs) albeit there are a broad array of strategies that can be pursued with ETFs.
For US citizens living outside the US, this effectively closes off mutual funds as an asset class since US mutual funds are now off limits and locally registered mutual funds are PFICs and therefore a horrible investment. A US citizen abroad can buy US listed ETFs or individual shares and bonds globally.
Doesn’t the part in your post regarding U.S. citizens being denied Fidelity investment service overseas actually read “U.S. investors”, i.e. persons residing in the US not being able to open a Fidelity international account overseas? There is a difference between a U.S. citizen and a U.S. investor in their eye. One could be a U.S. citizen and depending where they reside they can have a Fidelity account.
The problem with the international account is one can not invest in US-based mutual funds via the Fidelity account; the international offices have different “mutual fund” offerings.
Also if a US citizen who has a Fidelity account & resides overseas they can still keep the US based account; they just cannot put more money in the US based account. Solution – get a US address.
@Jim,
My comment was directed at the ability of those who have accounts in the US but do not reside in the US to invest in US mutual funds (a strategy often pointed to by financial advisers as a way to invest without running afoul of PFIC). There are lots of people who may have a retirement account or an individual account dating to a time they lived in the US whether they are US citizens or not.
As for your solution – get a US address – that may be easy for some but not others and it’s also reliant on being untruthful which could have negative consequences later.
I’m not sure what you mean by a Fidelity international account. Are you referring to an account with Fidelity Worldwide outside the US? If so, you will find that Fidelity Worldwide expressly forbids US citizens from being customers. It’s in their terms and conditions. Fidelity Worldwide operates everywhere except North America which is where Fidelity Management & Research operates.
It’s a shame the US government makes it so difficult for ex-pats to invest in US based mutual funds. I just got a letter from Fidelity telling me that I can no longer buy these funds! I guess I can use a friend’s US address, but no one here has opined whether one would be subject to that state’s income tax. Any advice?
I just received the dread letter as well. I live in Jordan, which means I got the letter about 10 days from the actual date when I can no longer use my account freely. It is very sad to see ex-pats treated this way especially that IRS still requires us to pay taxes and and file every year.
Reading the letter in detail and a corresponding WSJ article, http://online.wsj.com/articles/fidelity-bans-overseas-investors-from-buying-mutual-funds-1404246385, I can see restriction is only on mutual funds and not on individual stocks or ETFs. ETFs in my opinion are a better way to invest for retirement than funds mostly due to them being more transparent, easier to understand, easier to trade and also with lower management fees in general. Do you folks agree or am I mis-interpreting the ban?
Hi Muhanned,
You might want to call them up. My letter talked about not being able to purchase additional shares of Fidelity funds, which sounds like it is also a ban on ETFs, since it didn’t mention mutual funds; however, I live in Britain where the government also has a lot of rules about foreign collective investment funds, so maybe Fidelity is being stricter about this for the U.K.
I tried to switch into an ETF only to discover that my Roth IRA, opened long ago when I still lived in the U.S., would only allow me to go into mutual funds. The telephone numbers are available at fidelity.com/contactus , although the number for the U.K. was not correct (I had to add a 1 in the usual place for the country code).
Yes, it is sad to see this happen. What I don’t completely understand is why this is happening even to IRAs. I live in Britain, where the rules about foreign mutual funds are really strict, but people understood the rules to mean that IRA accounts were o.k. on both sides because they were classed as pensions and there is a pension treaty. If push comes to shove, I can always give my money to my non-U.S. spouse, but I have no idea how they expect an entirely American couple to survive abroad.
FYI, The Exit Tax is much more punitive than what is noted here and you really need to go to a company that fully understands it, unfortunately most US companies have no idea even the multinationals. You will be taxed on any money in your IRA at the highest tax rate and will have to pay it out of non-IRA funds if you are not old enough to claim on it. Also all worldwide assets are included even those accrued prior to coming to the US. This tax also applies to Green Card holders ie taxation without representation. Be very careful if you are returning to your home country and do your homework before taking any actions.
My son is currently living in Japan and will be there a couple more years. He had a Roth IRA and a general investment account. He recently received a letter from Merrill Lynch that they are closing his account and will charge him fees associated with closing his account. He’s planning to return to US eventually and uses parents address for his account. We’ve been in contact with our congressman to see what possibility exists for his investments. Merrill states that they have right to close account of anyone. And I have researched and have yet to find another company who will accept his investments. And his account doesn’t involve any mutual funds, just individual stocks.
Martha –
You may consider giving CFPB a try: http://www.consumerfinance.gov/complaint/
Do share us your experience!
If you don’t want to make a formal complaint, you can “tell them your story” instead:
https://help.consumerfinance.gov/app/tellyourstory
@martha maust
That’s a terrible situation, and is one of the reasons why I regularly warn people that US citizens who go abroad are subjecting themselves to potential financial ruin. Essentially they have 2 options: 1) go abroad for a short time only, and establish no financial or family ties while abroad or 2) plan to sever all financial ties with the USA, get citizenship elsewhere and renounce US citizenship as soon as possible. What your son is doing, i.e. living abroad as a US person long-term expat, is, in my opinion, no longer a viable option!
@Notamused, “living abroad as a US person long-term expat, is, in my opinion, no longer a viable option!”
Pre-FATCA I seemed to sense that. But in the good old days, the need to relinquish was not really there. But I felt you needed the citizenship of where you lived, that was always a must.
Post-FATCA, clinging US nationality MUST be treated like gum on your shoe. Sorry to say that in those terms.
Hello, just found this thread as it is extremely relevant to me. I changed my addresses all back to USA postal address (but still reside in Oz). The addresses used to be set to Oz. That does not seem to have automatically changed anything. I may call Fidelity but it sounds like a need to deceive in some way so I can trade inside my IRA again? Punished for doing absolutely nothing…Thanks!