Rollover options for 401k and expat address

[pacease]

My wife will be leaving her US job soon. We have moved to Japan but have a mailing address in the US.

What are the best options for a 401k Rollover? Should we change the address to Japan or use the US mailing address.

[captainspoke]

Two brokers that seem to continue service on accounts--allow the accounts to remain open/active--when the owners move overseas are vanguard and schwab (there may be some other smaller outfits). Two that do not are fidelity and merrill lynch (and perhaps others).

Tho it is supposed to be against the terms of service that you agree to when you started an account, some folks do use a US address, and claim that it works okay.

[TokyoWart]

Two brokers that seem to continue service on accounts--allow the accounts to remain open/active--when the owners move overseas are vanguard and schwab (there may be some other smaller outfits). Two that do not are fidelity and merrill lynch (and perhaps others).

Just to give my recent experience in contrast. Vanguard made a change in how accounts are charged and would not allow a foreign domiciled account to transition to a brokerage account in order to avoid the charge (which works out to $25 per month per individual fund and starts this month). My experience with Fidelity, in contrast, is that they still allow a foreign address as does Schwab. Not a brokerage account, but Wells Fargo also earlier this year started requiring a US address.

[captainspoke]

Just to give my recent experience in contrast. Vanguard made a change in how accounts are charged and would not allow a foreign domiciled account to transition to a brokerage account in order to avoid the charge (which works out to $25 per month per individual fund and starts this month). My experience with Fidelity, in contrast, is that they still allow a foreign address as does Schwab. Not a brokerage account, but Wells Fargo also earlier this year started requiring a US address.

Okay, scratch what I said about fidelity...

For vanguard, can you offer anything else about the transition to a brokerage account? (wouldn't it have been that to begin with?)

[SLW]

Unless the 401k investment options are terrible, it's not a bad idea to leave the account where it is without rolling it over. Employers are required by law to let you continue to maintain 401k accounts (with no contributions of course) so they would not be able to close your account no matter what your address is. If you roll over into an IRA, you will be at the whims of the new IRA custodian who could decide at anytime to close your account due to your foreign residence. BTW, Fidelity placed my account into "liquidating only" status when I changed to a foreign address, which meant no dividend reinvestments, security purchases or deposits. YMMV. I transferred my Fidelity accounts to Interactive Brokers which works, but they will not allow you to open new US retirement accounts (e.g. Rollover IRA) with a Japan address. You would need to open IRA accounts using a US address and change your address to Japan later.

[TokyoWart]

Just to give my recent experience in contrast. Vanguard made a change in how accounts are charged and would not allow a foreign domiciled account to transition to a brokerage account in order to avoid the charge (which works out to $25 per month per individual fund and starts this month). My experience with Fidelity, in contrast, is that they still allow a foreign address as does Schwab. Not a brokerage account, but Wells Fargo also earlier this year started requiring a US address.

Okay, scratch what I said about fidelity...

For vanguard, can you offer anything else about the transition to a brokerage account? (wouldn't it have been that to begin with?)

The overall background is that the most common account type at Vanguard used to be a mutual fund account. A few years ago they started to encourage customers to switch to having a brokerage account (I don't know why). The problem is that they won't allow you to open a new account while overseas and switching to a brokerage account was considered opening a new account. To accelerate the conversion of accounts to brokerage accounts, Vanguard announced a few months ago that they would start charging a monthly fee for each position or subaccount in a mutual fund account (e.g. Roth IRA, Traditional IRA, and VTSAX in a taxable mutual fund account would count as 3x the $25 monthly fee and each additional mutual fund adds another $25 each month). In my case this would be a $325 monthly fee because of the separate funds in my accounts. I spent a few hours with Vanguard on the phone and their representatives seemed surprized that there was no way around this to convert to a brokerage account if overseas, nonetheless they could not find a solution. Someone might be okay if they already had the brokerage account when they moved overseas, but this suggests that they are now moving the goalposts and don't want expat accounts.

[TJKansai]

The overall background is that the most common account type at Vanguard used to be a mutual fund account. A few years ago they started to encourage customers to switch to having a brokerage account (I don't know why). The problem is that they won't allow you to open a new account while overseas and switching to a brokerage account was considered opening a new account. To accelerate the conversion of accounts to brokerage accounts, Vanguard announced a few months ago that they would start charging a monthly fee for each position or subaccount in a mutual fund account (e.g. Roth IRA, Traditional IRA, and VTSAX in a taxable mutual fund account would count as 3x the $25 monthly fee and each additional mutual fund adds another $25 each month). In my case this would be a $325 monthly fee because of the separate funds in my accounts. I spent a few hours with Vanguard on the phone and their representatives seemed surprized that there was no way around this to convert to a brokerage account if overseas, nonetheless they could not find a solution. Someone might be okay if they already had the brokerage account when they moved overseas, but this suggests that they are now moving the goalposts and don't want expat accounts.

I got the notices as well and switched all my mutual funds to a brokerage account to avoid the new fees. Then I ended up with two brokerage accounts, one with individual stocks and ETFS and one with mutual funds.

It took a half hour on the phone to go over what happened, but they couldn't explain why I had two accounts instead of one. They did allow me to merge them.

I am less happy with Vanguard then I used to be. They seem to have done away with the secure message system (box is there but no compose button) and trying to find a phone number for them is like looking for a needle in a haystack.

I do maintain a US address.

[TokyoWart]

I am less happy with Vanguard then I used to be. They seem to have done away with the secure message system (box is there but no compose button) and trying to find a phone number for them is like looking for a needle in a haystack.

I agree. I've had a number of bad experiences with their customer service being inconsistent or incorrect in their actions. I had to convert an UTMA account to being fully owned by my (newly) adult son so that he could pay his tuition and Vanguard messed up the move for two and a half months, giving different explanations each time for what had happened and bringing us right up to the date where he would have been kicked out of college for failing to pay tuition. I still use Vanguard funds but their customer service and training for their staff are a mess.

[adamu]

Sounds like a ship sailing without its captain