Author Topic: Opening Solo401k after becoming expat, Schwab closing accounts?  (Read 321 times)

patjk

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Opening Solo401k after becoming expat, Schwab closing accounts?
« on: November 05, 2018, 10:04:04 PM »
Hello,
I've resided in the US for most of my life, but as of the last couple years I've resided outside the US, though I'm a US citizen.  I've banked with Schwab for many years and have most of my investments and savings there. Since July I've been working to open a solo401k, and decided to go with Schwab since I'm already setup there and because the application can be submitted online.

After going back and forth for weeks, I received this message from Schwab today:
Quote
Thank you for choosing Charles Schwab & Co., Inc. for your investment needs. We received your new account application; however, there is additional information we need before we can process your request:
1.       Home & Legal Address: It is required that Schwab obtains your Home & Legal address. Please provide a signed and dated letter of authorization verifying your Home & Legal address or send a secure message indicating your Home & Legal address.

Business Address: It is required that Schwab obtains your business address. Please provide a signed and dated letter of authorization verifying your business address or send a secure message indicating your business address.

Phone – Please provide a Local Phone number with matching country code for Thailand.

Passport- Need a clear copy of the passport’s full spread photo/signature page – We have only received an image of the bottom half of your passport, please provide an image of the full open photo/signature page.

As a result of your residency outside of the United States, Charles Schwab Bank is unable to maintain your Investor Checking & Savings accounts and will close your accounts 30 days from the date of this email.  However, you may be able to enjoy features similar to those on your current Investor Checking account. 
 
We would like to encourage you to switch to a Schwab One International account, which is our brokerage account designed specifically for international investors. The account offers specialized services for clients living abroad, including:

It is a bit concerning with them saying they'll close the accounts within 30 days.  A few queries:
1. Because I resided in the US when I opened the accounts and now reside outside, they want to convert them.  Ideally I don't want to do this because I may move back to the US in the near future.  Does anyone here with the Schwab One International account? Any things you don't like? My main concern is the debit card and tax implications, which refunds ATM fees and has been a big help.
2. I'm considering foregoing opening the solo401k with Schwab to avoid further issues, and instead open elsewhere.  Does anyone know a place I can submit the application online? I need to get the solo401k open and funded by Dec 31 so a bit on a time crunch now.

Looking for suggestions about this.  The other alternative is to have the accounts converted to the International One accounts, go forward with the solo401k as usual at Schwab.  My concern is having to convert back if I'm back in the US and all the other potential issues that come with it.

Thanks.

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Re: Opening Solo401k after becoming expat, Schwab closing accounts?
« Reply #1 on: November 06, 2018, 12:04:31 PM »
I have a Schwab One International - I've never had the (US-domestic) Schwab One or checking accounts, but I do know a few people who had to switch when they moved. I don't believe you have a choice in the matter - most US brokers will completely shut down your account if you move, Schwab at least let you keep it with some restrictions. The only alternative is to lie to them about your place of residence.


AFAICT the Schwab One International is identical to Schwab One for investing, except that you can't buy Funds (you'll still have the full range of Schwab ETF's). You can blame US law for that: no serious broker will sell US funds to persons not resident in the US.

You'll still have a debit card with the same free withdrawals, and you can still get checks - and you can still deposit checks using the app. One significant difference is that you can no longer have a full checking account (aka no High Yield Checking account) - that also means that your cash isn't FDIC insured since it's not in a full checking account. But you can still use the account for ACH (e.g. for moving cash to other bank accounts, or wherever else you'd use ACH).

If you move back to the USA, I believe you can just convert back to the domestic version of Schwab One, I don't know of anyone who's actually done that though but that's what customer service has told people who converted in the other direction.


Regarding the 401k: I don't have any experience with the 401k, but I know of people who've opened IRA's or rollover IRA's. The online forms only support addresses in the USA, but people have been able to open their IRA's by submitting the pdf form (you can submit it via the Schwab website online messaging). I'd recommend trying that.


The other good option for investing in the USA is Interactive Brokers: they're not free, but only charge approx 1 USD per trade (also: there's a 10 USD monthly minimum commission if you invest less than 100k with them), and they offer by far the cheapest currency conversion I've seen. Opening an account with them tends to be quite fast (faster than Schwab), as long as you have the necessary proofs of address etc. But I don't know if they offer the 401k you're looking for.


FWIW if you're USA taxed (the solo 401k suggests you are), then you'll want to avoid investing in non-USA domiciled funds or ETF's due to the (protectionist) PFIC rules, so you pretty much don't have a choice in using a USA based brokerage.

patjk

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Re: Opening Solo401k after becoming expat, Schwab closing accounts?
« Reply #2 on: November 07, 2018, 05:55:52 AM »
I have a Schwab One International - I've never had the (US-domestic) Schwab One or checking accounts, but I do know a few people who had to switch when they moved. I don't believe you have a choice in the matter - most US brokers will completely shut down your account if you move, Schwab at least let you keep it with some restrictions. The only alternative is to lie to them about your place of residence.


AFAICT the Schwab One International is identical to Schwab One for investing, except that you can't buy Funds (you'll still have the full range of Schwab ETF's). You can blame US law for that: no serious broker will sell US funds to persons not resident in the US.

You'll still have a debit card with the same free withdrawals, and you can still get checks - and you can still deposit checks using the app. One significant difference is that you can no longer have a full checking account (aka no High Yield Checking account) - that also means that your cash isn't FDIC insured since it's not in a full checking account. But you can still use the account for ACH (e.g. for moving cash to other bank accounts, or wherever else you'd use ACH).

If you move back to the USA, I believe you can just convert back to the domestic version of Schwab One, I don't know of anyone who's actually done that though but that's what customer service has told people who converted in the other direction.


Regarding the 401k: I don't have any experience with the 401k, but I know of people who've opened IRA's or rollover IRA's. The online forms only support addresses in the USA, but people have been able to open their IRA's by submitting the pdf form (you can submit it via the Schwab website online messaging). I'd recommend trying that.


The other good option for investing in the USA is Interactive Brokers: they're not free, but only charge approx 1 USD per trade (also: there's a 10 USD monthly minimum commission if you invest less than 100k with them), and they offer by far the cheapest currency conversion I've seen. Opening an account with them tends to be quite fast (faster than Schwab), as long as you have the necessary proofs of address etc. But I don't know if they offer the 401k you're looking for.


FWIW if you're USA taxed (the solo 401k suggests you are), then you'll want to avoid investing in non-USA domiciled funds or ETF's due to the (protectionist) PFIC rules, so you pretty much don't have a choice in using a USA based brokerage.
Great info, much appreciated.  Sounds like the only big downside is the buying of funds, which shouldn't be too big of a deal.

Regarding "One significant difference is that you can no longer have a full checking account (aka no High Yield Checking account) - that also means that your cash isn't FDIC insured since it's not in a full checking account."
- What do you use for your checking account then? I recently setup a Savings account at Schwab as well, so unsure what will happen with that.

  Cheers!

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Re: Opening Solo401k after becoming expat, Schwab closing accounts?
« Reply #3 on: November 08, 2018, 11:01:46 AM »
Regarding "One significant difference is that you can no longer have a full checking account (aka no High Yield Checking account) - that also means that your cash isn't FDIC insured since it's not in a full checking account."
- What do you use for your checking account then? I recently setup a Savings account at Schwab as well, so unsure what will happen with that.

  Cheers!
I don't keep any USD accounts (beyond a little bit of cash at Schwab for when I use the debit card), but that's because I don't really care about the USA/have no need of USD.

Of the people I know who do keep USD:
- One person apparently kept their BOA account, and BOA were OK with a foreign address (but they have to pay some monthly fee for this).
- Most lie to their bank and use a friend's/family member's address in the USA.
- Some keep a USD account at their local bank (availability probably depends on country - where I live it's easy to get accounts in most currencies). Where I live such accounts are still covered by an insurance equivalent to FDIC. I have no idea whether Thailand has anything similar...
- Some people keep it at Schwab or Interactive Brokers (riskier, no insurance - but unlikely to disappear).

Note: I do know of people using their Schwab International account for things like paying credit cards, so if you only need a US account for paying bills it should be good enough.

patjk

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Re: Opening Solo401k after becoming expat, Schwab closing accounts?
« Reply #4 on: November 11, 2018, 01:30:45 AM »
Regarding "One significant difference is that you can no longer have a full checking account (aka no High Yield Checking account) - that also means that your cash isn't FDIC insured since it's not in a full checking account."
- What do you use for your checking account then? I recently setup a Savings account at Schwab as well, so unsure what will happen with that.

  Cheers!
I don't keep any USD accounts (beyond a little bit of cash at Schwab for when I use the debit card), but that's because I don't really care about the USA/have no need of USD.

Of the people I know who do keep USD:
- One person apparently kept their BOA account, and BOA were OK with a foreign address (but they have to pay some monthly fee for this).
- Most lie to their bank and use a friend's/family member's address in the USA.
- Some keep a USD account at their local bank (availability probably depends on country - where I live it's easy to get accounts in most currencies). Where I live such accounts are still covered by an insurance equivalent to FDIC. I have no idea whether Thailand has anything similar...
- Some people keep it at Schwab or Interactive Brokers (riskier, no insurance - but unlikely to disappear).

Note: I do know of people using their Schwab International account for things like paying credit cards, so if you only need a US account for paying bills it should be good enough.
Good info, thanks for the feedback.