By Douglas Goldstein, CFP®

A middle-aged couple that recently made aliya told me that they were concerned about how to handle the IRAs (Individual Retirement Accounts) that they left back in the United States. They thought that they either needed to leave these assets with a broker in a different time zone or open the accounts, pay taxes and early-withdrawal penalties, and move the money into their Israeli shekel account.

If you have U.S. retirement funds, you do not need to move the accounts. In fact, by taking the money out of IRAs and bringing it to Israel, you might be creating an unexpected tax bill. Along with having to pay tax on the amount you move, you may also get hit with a 10% penalty for early withdrawal.

You can still handle the accounts from Israel
I generally advise olim who have IRAs to leave the account with an SIPC-insured brokerage firm. Even if you created a financial plan while living in the United States, you should create a new post-aliya plan. Choose a financial planner who is familiar with both your American investments and life in Israel to guide you through this process. And when it’s time to implement the new plan, choose a local firm that provides quality service while holding your account in America with the familiar investments (stocks, bonds, mutual funds, CDs, etc.).

New olim should consider how much of their money they should they bring to Israel with them. After all, your new life is in a shekel-based market. Determine your cash-flow needs, consider the importance of currency diversification, and divide up your money in proportion with the asset allocation model you have developed in your financial plan… You don’t have a financial plan? Get to work on it right away, since that will be the blue-print for your successful financial aliya. Since the focus of your new life, your salary, your checking account, and your new pension plans will now be based in Israel, having geographical diversity (by keeping your IRAs in America) may be prudent. At the end of the day, know that you have choices about where to place your funds and that you can handle your U.S. investments from your new home.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA and SIFMA. Accounts carried by National Financial Services LLC. Member of NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.