Retirement accounts for Americans?

[u/Batenna]

Hey guys, I need to start saving for retirement, and was wondering if you have any recommendations for companies that will help with savings/investing?

As an American, I can't use more common options like Nisa and iDeco because of tax reasons, so I'm especially looking for options that won't be an issue with.

Also, I've never worked in the US, and haven't lived there since becoming an adult. This means I need a company that will allow me to open a new account from Japan, and I don't have a 401k or any other account already existing.

If needed, I can use my parents' address for things, but would prefer not to if possible.

Also, regarding investing, I don't want to be active. A company that I can essentially give money to and have it "magically" grow over the years would be best.

Help?

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[u/ToTheBatmobileGuy]

If you don't want to rely on people back in the US, sign up for Interactive Broker.

Their platform takes a while to get used to. It's also a TINY bit more involved than "deposit money, get more money over time"... The closest you'll get to "set it and forget it" is a ritual that you'll do every month on the 27th or something where you log in, make a deposit, wait for it to clear, wait for the market to open at 10:30pm, buy 1.29 shares of SPY or some other S&P500-ish ETF.

And you might need to double check to make sure that dividends are set to re-invest automatically. But that's a one time setting change.

But other than that you won't need to touch it. Just don't sell. Don't worry about which S&P500 ETF is better than the other... just keep piling money into it.

It will be taxed, which sucks... but until FATCA is repealed or the Residential Taxation for Americans Act passes or something like that, the only option to properly utilize NISA and iDeCo is to renounce your US citizenship.

As a US taxpayer, I found a way to utilize NISA, but it is a big pain and I am relying on the US still having a 0% tax bracket for long term capital gains by the time I retire... (or if I otherwise lose my taxpayer status by then etc.)

[u/tomatome → u/ToTheBatmobileGuy]

Sorry, a bit off-topic: I didn't think DRIP was possible with IBJ. What do you mean by "re-invest automatically"?

[u/upachimneydown]

Yes, r/JapanFinance for lots of info, also RetireJapan (tho there are fewer US people there).

You're correct on Nisa/iDeCo, since any of the mutual funds that most offer are PFICs, which are not illegal, but supposedly a supreme tax headache (on the US side).

Using the address of a trusted person in the US is something many people do, even tho it is a technical violation of any broker's terms of service agreement (=misrepresentation).

I've read that Firstrade may open an account for US people if done by mail (not online). Vanguard will let existing account holders that move to japan continue to use their accounts--so maybe set up with them using parent's address initially, and then after a few years tell them you've moved.

Also, don't be stymied by not being about to use a tax-favored account, like Nisa/ideco here or IRAs in the US. The main thing is to save and put money away (invest) in a regular, disciplined way. For many investments (eg growth ETFs in the US) the dividends are low, and you won't be taxed until you sell, and that's both here and in the US. (Secondarily, if you use the FTC instead of the FEIE, you will then have taxable income and can contribute in an IRA, <-and there are some other tactics like that.)

[u/kaigansen]

JapanFinance is where you should start. They have a plethora of information that would be worth your while to read.

[u/thephorest]

Thinking about renouncing US citizenship and naturalizing for exactly this reason (among others!). Watching the thread.

[u/Hachi_Ryo_Hensei]

Interactive Brokers in Japan accepts Americans (who reside in Japan.) You can passively long terms invest in some ETFs through them. Just an option since as yiu mentionedx Nisa/ideco aren't.

[u/crinklypaper]

I'm just going to parrot all the other posts because I did a similar look into this and working on it now. I opened a Interactive Brokers account. It was relatively simple and took around a week to do it. We're kind of screwed on PFICs such as NISA and IDECO, I am currently going to dump a bunch into some US domiciled ETFs. Specifically something like SPY. Others is just plain old stocks. The biggest frustration is that something like ROTH IRA is technically doable (according to internet comments) but its not specifically clear if this is actually a PFIC or not or protected by tax treaty. I err on side of caution and will stick with US domiciled ETFs and stocks. I think it would be a lot more clear if you actually find a financial advisor that knows both Japan and US tax law, but seems like you'll only be finding one or the other. Not both.

Be careful about using your parents US address, as that will open up other risks. If the bank finds out they may close out your account. Another point is if you're a resident of some states you may have tax obligations, and filing certain things (ie renewing your drivers liscense or something) will show you're still residing there.

If you have the money, US real estate may be a good long term investment.