Mexico Expat Forum

U.S. brokerages and mail forwarding services

1/17/2017 23:17 EST

Anyone had problems using using a mail forwarding service to satisfy U.S. brokerages that you reside in the U.S.?
Anyone with experience with problems like this?

sunshine71

1/18/2017 22:28 EST

MAIL BOX ETC will give you an address of Laredo, TX or Miami FL. Use that as your address, and it will be forwarded to you in MX.

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JohnPS

1/18/2017 23:21 EST

Schwab and Etrade both figured out that it was a PMB and not an apartment number. They insisted on a U.S. residence address, and a utility bill to prove it.

Schwab fortunately switched me to an international account with pretty much the same account features and benefits. Etrade however would not allow my husband to open an IRA account with them, so he put his IRA with Schwab.

tecolote

1/19/2017 01:12 EST

Sunshine71 - Thanks for your reply. My concern about using services like Mail Box Etc is whether any expats who have used them have run into problems with their U.S. brokerages. I've read that brokerages are becoming more and more paranoid about customers who reside out of the country, and will sometimes terminate their accounts if they can't verify a U.S. residential address.

Many of the mail-forwarding services give their customers addresses that look like street addresses, but are followed by a unit number or box number, which shouldn't be hard for a paranoid brokerage to find out aren't real residential addresses.

If you have any personal experience you'd be willing to share, that would be helpful (or write to me privately, if that's possible on expatexchange -- I'm a newbie).

Many thanks!

tecolote

1/19/2017 01:22 EST

JohnPS - Thanks for relating your experience, which is exactly what I've been concerned about. It's good to know about Schwab's willingness to switch you to an international account.

Does Schwab have limitations on the kinds of U.S. securities that you can hold in an international account? In other words, did switching to the international account, with its investment limitations, require you, for example, to sell some U.S. investments?

Thanks again for sharing your experience; very helpful!

Moving to Mexico is certainly complicated!

JWinPS

1/19/2017 03:23 EST

I'm gathering info for a potential move and had the same question.

Over the past few weeks I checked out major financial institutions in the US. All of their online applications stated the individual must provide a physical residence address. A mail forwarding service address might get overlooked during the application process, especially if done so on line. However, it could eventually get discovered as the experience JohnPS had shows.

I'm a follower on the "Two Expats in Mexico" website. The man running the site recently had an article about opening a Mexican bank account and visa requirements.. I privately emailed him asking about using a US bank and a mailing address. He replied a mailing address as being problematic for the same reason.

However, he suggested a way to accomplish having a US based financial institution and a mail forwarding service: Use a trusted family member's address for the financial institution [if they would agree.] I would add a trusted friend would also seem a viable option. The relative/friend could forward written financial institution communication to the chosen mail forwarding service.

If I chose to go this route, I'd take it a few steps further. I'd choose paper free communications, my relative/friend wouldn't receive monthly and year end statements/forms. I'd also opt out of the institution sharing my information with third parties. My relative/friend would have third party junk mail greatly reduced, if not eliminated.

Each financial institution's website has a "Privacy Policy" link, which BTW isn't always easy to find. It describes what, if any, information they share and how to opt out of sharing.

A relative/friend would have minimal inconvenience from delivery of physical mail. One could have a US financial institution and a mail forwarding service for any other items.

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Launia

1/19/2017 07:53 EST

When i write such an address following the street name I write
# 123
The sign # instead of box or unit

Some companies see it through..
It is a shame it is all so complicated here and in the states...

For myself retirement is not a tranquil one overseas

Launia

1/19/2017 07:56 EST

Those must be new laws becase we lived and worked around the world our entire life and enver encountered so much problems.
Now retired I am overwhelmed by all the reugulations.
I wonder when living aboard a boat, how these people domfor an address.
Sometimes laws change and they do not nake any sense. We stull are oaying our taxes to the .IRS wether we are expats or living in the US.

JohnPS

1/19/2017 11:06 EST

Launia, I was told that it has something to do with the Dodd-Franks Act, which is a piece of annoying Obama legislation. I don't know the specifics of the Act, but yes it is relatively recent.

I routinely use the # sign instead of "PMB", but Etrade said the address was "unverifiable", and Schwab also could tell it was not a residence address. If they bother to check the address through the USPS, they can determine whether the address is residential, commercial or a private mailbox service.

JohnPS

1/19/2017 11:26 EST

The one restriction that I encountered with the Schwab International account is that I'm not allowed to purchased U.S. mutual funds. However, I am able to purchase ETFs (Exchange Trade Funds" and I'm satisfied with that.

I was not holding any mutual funds in my account when I converted to International, so I don't know whether or not they will allow you to keep mutual funds that you already own.

(Call Schwab to ask questions. If you already have a Schwab account, pretend that you don't, so you don't get into trouble.)

I also anticipate that you would encounter similar restrictions if you were to open a Mexican brokerage account. Also, if you have a bank or brokerage account outside of the United States, be absolutely certain that you file the required information forms with the IRS annually. The IRS penalties are severe - $10,000 for each form you failed to file.

An address of a friend or relative in the U.S. will not work if the brokerage requests proof of residence, such as a utility bill or lease agreement. However, if you own residential real estate in the U.S. (even if a rental property), it is likely that you can get by on that.

My other concern with using a U.S. address when I don't live there, is that some states, California in particular, aggressively look for indications of residency and will attempt to tax you as a residence, based just on the fact that you indicate California as your residence on various documents with banks, brokers, credit cards, DMV, etc. Whether they succeed in taxing you as a resident or not, it can still turn into a major headache.

JWinPS

1/19/2017 15:19 EST

Hi JohnPS.

It had nothing to do with Dodd-Frank which actually helped strengthen, but not eliminate, many financial institution practices which were detrimental to customers for the benefit of the financial institutions.

The clamp down came as a result of 9/11.

Here's an article.

https://bkpk.me/how-to-open-a-us-bank-account-as-a-tourist/

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JWinPS

1/19/2017 15:23 EST

A possible answer!

In addition to ideas in the link I posted in my response to JohnPS above, here are some other possible options.

I was not aware of them until I did a search for why it's so hard to find a US Bank that will open a non-resident account for a US non-resident expat.

https://www.reference.com/business-finance/can-open-u-s-bank-account-non-resident-7a1a4d82ff76d4c1#

JohnPS

1/19/2017 15:43 EST

I believe it was an etrade representative that told me (apparently in error) that the Dodd Frank act was to blame. He also said it was to combat money laundering and terrorism. I never could make any sense out of the reasons given. I will never understand why the government makes it so difficult for honest law-abiding citizens to carryout routine business affairs, when the government should be focusing more efforts on finding and convicting the wrongdoers.

MexJuan1

1/19/2017 16:39 EST

But, oh so quick to blame Obama! Funny how that works???

Launia

1/19/2017 18:51 EST

What an headache! I have veen lucky mind of.
So I am not sure what to say.
Just sad, that when we wnt to go back to the states it will cost chaninf those accounts.
It is a total loss all the time. Here and there.

Launia

1/19/2017 18:54 EST

My advise is to get the best accountant or trusted accountant in the USA that fully understand the situation.
I have had an accountant. Lawyer, who did not.
So not all in the States are clever enough.
Always have to monitor

Launia

1/19/2017 18:56 EST

Oh yes. Good you mention fhe DMV beacause impossible to renew a driver s license in tne States if I could not prove residence even though, my banks, my property etc was in one state. I had to ask for a Mexican driver s license.
It makes me angry all that.

Launia

1/19/2017 18:58 EST

John ps, you are so right......

JohnPS

1/19/2017 20:03 EST

I had no problem renewing my California drivers license, and I had given them my Mexican physical address, along with a U.S. mailing address, which they mailed it to.

However, renewing the CA license plate was a big hassle because DMV kept screwing up. For one, they cancelled the registration for lack of insurance (even though they had received the proof of insurance in their prescribed format).. After we got that straightened out, they mailed the renewal stickers to our previous physical address in Mexico, via regular mall which is slow slow slow - which of course they should have sent to the U.S. mailing address that we had provided. It took a long time to contact DMV by phone regarding the stickers we had not received, but we eventually got them to send new stickers to the U.S. mailing address. A few days after we got them, our former landlord called to say he had just received something from the DMV with our name on it. (This also tells you how slow Mexican mail can be.)

JWinPS

1/19/2017 20:31 EST

LOL MexJuan! Yes. It's so funny how so many people blame the Obama administration for things that occurred under the Bush Administration or which were created by Republican Majority Congress during Obama's Administration. People really do need to check what bills get passed and who in Congress supported them.

tecolote

1/19/2017 23:00 EST

JohnPS - Thank you for your willingness to share this very helpful and important information.

I think I had heard, but I didn't know for sure, that U.S. mutual funds would be off-limits for people who establish international accounts, like the one you have at Schwab.

For people who do already own mutual funds, this limitation could really be a major one -- e.g., if you would incur large capital gains on mutual funds that you don't want to sell (or large capital losses when you don't want to sell).

An added concern, which I'd only dimly wondered about: your point about potentially begin charged taxes by a state that you only nominally indicate you are a resident of. This could be another can of worms with the potential to occupy one's retirement years with more frustration.

-- What amazes me about this discussion here is that I've looked for and haven't found much discussion of these serious issues elsewhere. Under the circumstances, how so many expats are able to live in Mexico and still handle their investments, is pretty incredible.

You've mentioned Schwab's and eTrade's aggressive detective work that can result in denial of standard U.S. brokerage accounts. I wonder if other Expatexchange members have had similar problems with other large brokerages, like Vanguard, Fidelity, Ameritrade, etc.?

You commented that you don't think using the address of a friend or relative would work if a brokerage requests proof of residence (such as a utility bill or lease). But surely some people simply reside with their families or friends, and shouldn't be excluded by brokerages if the utility bills are paid by their families or friends. -- Or maybe this is idealistic, and brokerages won't even accept such situations, which do happen.

tecolote

1/19/2017 23:01 EST

JohnPS

1/20/2017 01:26 EST

Is anyone able to explain to me why my residency outside the U.S., even though I'm a U.S. citizen, is such a big deal with brokers? I feel like I've lost some of my citizenship rights.

I think I can see why credit card companies might have some concerns - Isn't it a lot harder for them to sue for collection and even to track you down if you're outside of the country? But what added risk does a broker or banker have in holding your money,?

OtterBeMe

1/20/2017 03:25 EST

U.S. Government rulings (FATCA) have made it difficult, from what I've been told, for foreign banks to want to have U.S. citizens in their businesses as there are penalties to pay both by the banks and the citizen if the information is not reported to the IRS. We were just made aware of this. It is quite invasive and pushy of the U.S. government to attempt to boss foreign banks around, so some of them just don't want to deal with U.S. customers anymore...from what I hear. https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-u-s-taxpayers

lmontgom

1/20/2017 09:10 EST

What is the cost of such service from Laredo? Does Mail Box Etc open, scan and email what's in your mail? I need to sign up right away.

giershift43

1/20/2017 10:06 EST

Most statements from financial institutions can be accessed online, so why is receiving statements an issue.
I am frequently asked if I want to go paperless. So why would that be a problem?

Launia

1/20/2017 10:12 EST

That is good to hear that california has different views on renewing driver s license
I wonder if california would renew mine that
I had in san diego in 2001

Launia

1/20/2017 10:15 EST

John you are right.
I feel the same with that ridiculous change

Launia

1/20/2017 10:18 EST

It has been like that for a few years.
My Us Account every year declare to IRS my mx bank accounts. And having a corporation here even making no business it has to be delcared to the US as well and to Mx.
Not all US accountants understand that yet.
Important to make sure

JohnPS

1/20/2017 10:53 EST

Please note that Mexico has entered into a FATCA agreement with the IRS, whereby Mexican banks are required to submit 1099 forms and cooperate with the IRS concerning accounts of U.S. nationals. This has complicated the process somewhat for U.S. persons opening Mexican accounts. But without such an agreement, the IRS would intercept some 30% or so of funds that are transferred from a U.S. bank to a foreign bank.

FATCA is an aggressive attempt to prevent U.S. persons from hiding money from the IRS in foreign accounts. I still do not understand why they would make it difficult for U.S. persons outside of the U.S. to keep their money in the U.S. Just where do they expect us to keep our money?

sunshine71

1/20/2017 14:04 EST

Just go to your nearest MBE or I-Shop in your city in Mexico. The mail boxes are a few hundred USD a year, but you can find people to share with you. No, no one opens your mail except you.

JohnPS

1/20/2017 15:31 EST

Except you and maybe the person you share your box with. I would only share wit a very trusted faculty member.

JohnPS

1/20/2017 16:13 EST

"Family" member, not "faculty". Stupid typing "corrector"..

Wis2Mex

1/20/2017 23:17 EST

I just trying to understand this thread. Its 2 subjects, if you bank with a Mexican (foreign) institution AND/OR is you use a US bank only but use a Mail Service MBE.

So....If I have Wells Fargo Bank and Brokerage services and Vanguard 401K and IRAs for the last 35 years and next year I deccide to move to Mexico, which I will, And I use MBE in Texas as my address my accounts will be in jeopardy??????

PS: I will be having no accounts in a Mexican Bank.

Wis2Mex

1/21/2017 00:42 EST

So if you have a 30 year 401k account at Vanguard and a Wells Fargo bank and brokerage and retire and Ex-pat to Mexico, set up a MBE in Texas Vanguard and Wells Fargo would do what? Tell you to move your money?

Wis2Mex

1/21/2017 03:22 EST

Would established 401Ks and IRAs be ok if you used a mail forwarding address?

JohnPS

1/21/2017 11:48 EST

I have had no issues with my 401(k), which I converted to an IRA after moving to Mexico. However, this account may perhaps be off the radar.

My husband's IRA is at Schwab, invested in ETFs, since he can't purchase mutual funds.

I'm unable to verify, but I suspect that you can keep existing holdings in mutual funds, as I was only told that I can't purchase them while a nonresident.

JohnPS

1/21/2017 13:02 EST

The Schwab representative told me that mutual funds are "not licensed for sale outside of the U.S.", It did not sound to me like that restriction applied to keeping your existing holdings when you move, but you would need to contact Schwab to verify.

Parlino27

1/24/2017 09:09 EST

go paperless and use electronic mail

Parlino27

1/24/2017 09:10 EST

Also UPS has street address Mail box service.

meridasun

1/24/2017 11:13 EST

The issue is not with the brokerage companies it is with the foreign jurisdictions that are unable to regulate investment funds that are not registered in their jurisdiction. So most prohibit the sale of foreign [including US] mutual funds to residents living in their countries includes overseas US citizens trying to buy mutual funds back in the US.

lmontgom

1/24/2017 12:59 EST

Here is an explanation...https://thunfinancial.com/us-brokerage-accounts-american-expats-closed-2015/

This final paragraph is also helpful (and it's what I have done): "Finally, it should also be noted that in many cases the best solution for Americans abroad is simply to keep their address of record in the U.S. Any American living abroad, even for an extended period, is well within their rights to use a U.S. address for the sake of opening accounts and receiving mail. In this case, there will be no restrictions on the account."

But, finally, the most important: "IB’s global offerings, low cost and best price execution, advanced trading technology and comprehensive reporting features make us the ideal online broker for expats whose US-based brokerage accounts have been closed due to FATCA regulatory requirements." Found at
https://www.interactivebrokers.com/en/index.php?f=13416

JohnPS

1/24/2017 17:01 EST

That sounds sensible. However Schwab and Etrade both insisted that I must prove my U.S. residence address with a utility bill in my name. Seems that they have established stricter policies than what is in the regulations.

llep

2/28/2017 23:50 EST

I am researching a potential move and knew of the difficulties with financial institutions when moving abroad. I have no intention of trying to fool the companies that hold my dough. I sent emails to both of the companies I use saying I planned to reside outside the US for a few years and how would that affect my accounts. One, Vanguard said no problems. The other said "big problems" so I know if I go through with this I will need to change one company. As has been mentioned, Schwab has accounts set up for this and experience dealing with expats. I have been with the company I might need to leave for over 20 years and have a high six figure balance with them.

giershift43

3/1/2017 07:52 EST

I am interested in following this topic. I have some funds with Vanguard. I have found them easy to work with and the 2 other companies I use just seem to make all transactions more complicated than necessary.

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