Stopping Ideco

[ckm]

Hi, moron here trying to close or stop the ideco withdrawal I just spent months setting up. I did it all through Rakuten before realizing the PFIC implications as an American. I am currently two contributions in, so I don't even care so much about a few Man En sitting in savings until I am 60, I just want the monthly transfer to stop.

I spoke to Rakuten, and they pointed me to this form, but I am at a loss for what reason to select.

I think it's 3 or 16 (first choice) but I was hoping someone else may have done this?

 

[kristhuy]

@ckm Reason 4 is the one for people who are eligible to keep contributing but want to stop contributing for some reason.

 

[ckm]

@kristhuy Wow ok. So, that's stating that I've decided to manage my own investments. Thanks a ton!

 

[rogueebear]

@ckm Thing is if you keep the iDeCo account open, (even if no longer contributing) you have to select a fund to invest in. So that may not resolve your PFIC issue, because you may find you’re still investing in a PFIC, with the small balance in the account, even though you’re no longer contributing.

No idea if rakuten offer a “cash parking” fund to invest in, which may not be a PFIC or not?

 

[ckm]

@rogueebear They do. That's where I moved everything to for now.

 

[rogueebear]

@ckm Oh right, all good in that case then.

There was also that discussion a few weeks/month ago about iDeCo and US tax payers too. No idea if there was an update on that, but it could be established that iDeCo might actually be possible for US tax payers.

So just my own opinion here, but it could still be worth contributing to your iDeCo. That way the account grows, and you utilize the tax deductible. And then should it be established that iDeCo is all good for US tax payers to invest in PFICs then you can switch from “cash parking” to FundX with all the money you already contributed. Because like pension, once the month has passed, there is no getting that month back to contribute

 

[fancyface]

@ckm Lots of people say Ideco is OK for Americans, though.....?

 

[dee436]

@fancyface The current general consensus is that an iDeCo account offers no protection from PFIC reporting/taxation, so it depends on what you buy inside of your iDeCo account. If the products held in an iDeCo are PFICs, then PFIC reporting/taxation will apply. Parking cash is often the only non-PFIC option, and I'm not sure all iDeCo providers will allow parking cash. Parking cash until retirement is also not generally a great investment, depending on how long until retirement age you have.

 

[fancyface]

@dee436 Thanks for the info. I had thought they were OB for USians but I had heard some others say otherwise recently and wasn't sure what to think. Makes investing overseas tough...

 

[ckm]

@fancyface There is a debate about that, and it's not allowed as with other countries' treaties. In my case, it's probably better to use my US investment accounts and not worry about the admittedly low risk of problems down the road. I'd be happy to be wrong if anyone knows otherwise.

 

[marie0628]

@ckm I would vote for anyone who attempted to end these insane rules for Americans.. Republican, Democrat.. whoever.. I don't even care what their other policies are.. There's needs to be a change.