Author Topic: International funds = foreign financial interest?  (Read 5509 times)

Travis

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International funds = foreign financial interest?
« on: February 19, 2015, 01:50:36 PM »
I'm renewing my security clearance paperwork and it asks if I have or ever had any foreign businesses, stocks, personal property, company shares, investments, ownership in corporate entities, or bank accounts that I have direct control or if someone else is controlling for me.  Would an international index fund qualify?  The fund is owned by Vanguard, but it is invested in various foreign companies and I pay foreign taxes on it.

Leanthree

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Re: International funds = foreign financial interest?
« Reply #1 on: February 19, 2015, 01:55:55 PM »
Unsure what your job is but I'd disclose it. No way should anyone care if you do, but they could be annoyed if you don't.

jasminegeekface

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Re: International funds = foreign financial interest?
« Reply #2 on: February 20, 2015, 09:33:51 AM »
I don't have an answer, but I'm very curious to know this myself. I've been considering investing in an international index fund but I'm in the middle of trying to obtain a security clearance, so I've been putting it off.

dz1087

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Re: International funds = foreign financial interest?
« Reply #3 on: February 20, 2015, 10:51:40 AM »
I would imagine that this applies to directly purchased stocks only. The index fund is what you own, its holdings will change over time. You do not directly own any foreign stocks.

skyrefuge

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Re: International funds = foreign financial interest?
« Reply #4 on: February 20, 2015, 11:09:21 AM »
Obviously this is not the same thing, but the question sounds pretty similar to the relatively-new IRS requirements for reporting foreign assets (and those requirements raised the same question in me: is stock of foreign companies included?)

At least for the IRS, they're only looking for serious international men-of-mystery.

http://www.irs.gov/pub/irs-pdf/i8938.pdf

Assets Not Required To Be Reported

1. A financial account that is maintained by a U.S. payer, such as a domestic financial institution. In general, a U.S. payer also includes a domestic branch of a foreign bank or foreign insurance company and a foreign branch or foreign subsidiary of a U.S. financial institution.

Examples of financial accounts maintained by U.S. financial institutions include:
U.S. mutual funds accounts;
IRAs (traditional or Roth);
Section 401(k) retirement accounts;
Qualified U.S. retirement plans;
Brokerage accounts maintained by U.S. financial institutions.

Lkxe

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Re: International funds = foreign financial interest?
« Reply #5 on: February 20, 2015, 11:37:41 AM »
Just did this- military. A mutual fund is not directed by you so it is not reported- individual stocks, bonds ect would be.  You don't pick, you don't avoid blowing up from personal interest. Though writing it down shouldn't hurt you- I do for stocks close just under the report limit, in case the market jumps.
« Last Edit: February 20, 2015, 11:44:19 AM by Lkxe »

johnny847

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Re: International funds = foreign financial interest?
« Reply #6 on: February 20, 2015, 12:27:30 PM »
You could just write on the form "I am not including domestic mutual funds holding foreign securities."

Generally when you encounter an ambiguous question on a form, the best approach is to write something on the form to make your interpretation known. That way you can't later be accused of hiding anything intentionally or negligently.

If you orally ask the entity that gave you this form and they tell you not to include domestic mutual funds, then I would still write that on the form so that there is a record of it.

Alternatively, you could disclose the domestic mutual funds and explain in a statement on the form that they are not foreign securities, but you are disclosing them for the avoidance of doubt.

Either way though, I would write something on the form to explain your interpretation. That is what I personally do with forms that have ambiguous questions. It's part of the reason I like using paper forms rather than electronic ones.

I agree with this approach - you are not lying, and if they want you to spell out what funds you have that hold foreign assets, they'll ask for it.  Though as Lkxe said,
Just did this- military. A mutual fund is not directed by you so it is not reported- individual stocks, bonds ect would be.  You don't pick, you don't avoid blowing up from personal interest. Though writing it down shouldn't hurt you- I do for stocks close just under the report limit, in case the market jumps.
I suspect the reason they ask is to see if you have a potential conflict of interest, which would be difficult in the case of a mutual fund because you don't have any control over what the mutual fund invests in.

 

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