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Old 25-06-2019, 06:14 AM   #1268
BBCWatcher
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Join Date: Jun 2010
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We do fit squarely in your definition of "US persons" and likely (but not guaranteed) will return to the US at the completion of my wife's assignment.
OK.

Are there any financial opportunities that would be strongly appealing to us here in Singapore, given that I have relatively easy access to US-domiciled mutual funds and banking products?
Yes, a couple ideas come to mind. Either/both of you should continue contributing to 401(k) plans if your employers offer them. You and your S.O. can also contribute to IRAs if either of you has earned income that isn’t excluded via the U.S. Foreign Earned Income Exclusion (IRS Form 2555), and assuming you file a joint tax return. (If you don’t file jointly then you each must qualify individually.) There’s something called a “backdoor Roth IRA” if your income is too high.

As U.S. persons you can both contribute to 529 plans if you wish. Last I checked New York has a very good one, but there might be a better choice if you’re still treated as a resident of a particular state.

If you’re self-employed and thus don’t have a 401(k) you might be able to set up a Solo 401(k), although I don’t know much about it.

If your income is lower (now lower U.S. tax bracket) then you could consider Roth conversions, if applicable.

Last I checked the income-based repayment terms for student loans didn’t factor in foreign excluded income, so you could take a look at that option if either of you has outstanding student loan debt.

I haven't gotten many warm fuzzies from you on US persons investing in the SRS but wanted to confirm you really did not see any tax advantage for us at all?
I don’t think it’s worth the hassle. Certainly you wouldn’t do it until after exhausting the more attractive U.S. vehicles — IRA, 401(k), 529. Oversimplifying only slightly, you’d have to lock the SRS money for 8 to 10 years (penalty free withdrawal is available 10 years after account establishment assuming you’ve left Singapore and aren’t citizens), the IRS claws back some of the initial Singapore tax savings to the extent you have unexcluded income, you can only invest the SRS funds in SRS compatible and U.S. friendly ways — Singapore Savings Bonds would be on that short list — with pay-as-you-go U.S. income tax (SRS is meaningless on the U.S. side), you’re taking a ~10+ year gamble on the currency exchange rate, and you still pay 7.5% Singapore tax at the end (15% rate on 50% of the total withdrawal, with some risk of a rate hike, and meaning this won’t really work at all if you’re in a lower Singapore tax bracket) but might be able to apply some of that future tax as a Foreign Tax Credit on the U.S. side in a very complicated calculation. (I think you can only take a future FTC on the portion that’s attributable to unexcluded income.) Could you end up with a little tax savings at the end? Maybe, but the investment choices realistically available to U.S. persons are limited and lousy. And did I mention it’s a hassle?

Since most of our income is now in Singapore, I would anticipate we have two options: either settle for a higher-cost Singapore investment vehicle that avoids PFIC complications or periodically transfer funds back to the US for investment. (Somewhat depending on your answers to #1 and 2 above) what are your thoughts?
Definitely the latter.

What Singapore-based investment choices would you like to nominate for consideration? SSBs are mildly interesting as variable CD-like instruments for holding some Singapore dollars in reserve, so I think those are OK as a buffer pool during your time in Singapore. The interest is U.S. taxable, of course, and your CDP account is U.S. reportable. Beyond that the list gets very short, I think. Sometimes there’s something slightly interesting and U.S. compatible (and taxable), such as the 2.7% Temasek general obligation bond that popped up in 2018, that bars U.S. persons completely. (Not for any genuine regulatory or legal reason that I can discern.)

You've gone over life and medical insurance at great length; any thoughts on contents coverage?
Just that the “all-risks” variant is much better than “insured perils.” Last I checked AXA had a pretty good deal on that type of insurance. The bundled liability insurance is somewhat interesting but doesn’t seem to cover U.S. risks. It’s usually local only or worldwide excluding North America.

Last edited by BBCWatcher; 25-06-2019 at 06:48 AM..
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