# Using Retirement Account in US to purchase lot in the Philippines



## Yugioh (Sep 21, 2013)

We are thinking of using my wife's old employer's IRA retirement account here in US to purchase a subdivision lot in Cebu. My wife's citizenship is filipina. Because of the US tax rules for retirement accounts, ownership of asset must not be in my wife's name but on my wife's US retirement account. Not sure if Phils laws allows this one.
Would appreciate any info.


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## JimnNila143 (Jul 23, 2013)

Yugioh said:


> We are thinking of using my wife's old employer's IRA retirement account here in US to purchase a subdivision lot in Cebu. My wife's citizenship is filipina. Because of the US tax rules for retirement accounts, ownership of asset must not be in my wife's name but on my wife's US retirement account. Not sure if Phils laws allows this one.
> Would appreciate any info.


Does your wife have US Citizenship as well as Filipino Citizenship?


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## Yugioh (Sep 21, 2013)

My wife is a green card holder in US.


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## Asian Spirit (Mar 1, 2010)

Yugioh said:


> We are thinking of using my wife's old employer's IRA retirement account here in US to purchase a subdivision lot in Cebu. My wife's citizenship is filipina. Because of the US tax rules for retirement accounts, ownership of asset must not be in my wife's name but on my wife's US retirement account. Not sure if Phils laws allows this one.
> Would appreciate any info.


Not sure about the law but sounds like a decent plan--IF----you have been married to her enough years to know you won't loose everything. Plus, never make the purchase from there. Wait till you are here and do it in person for your financial safety...


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## jon1 (Mar 18, 2012)

You also might want to consider just taking a loan against the retirement account. My 401K allows for a loan paid back at 4% interest which can be for anything (5 year payback) up to $50K or towards a retirement home (15 year payback). You are essentially paying yourself back with interest.


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## cvgtpc1 (Jul 28, 2012)

I may be wrong so others can comment but you might want to get her US citizenship so she can receive social security in the PI as I don't think she can if not. I know we're counting on my wife's SS to chip in...and will apply for her dual citizenship before we move.


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## Phil_expat (Jan 3, 2011)

Is her account a traditional IRA or a Roth IRA? If a traditional IRA there will be substantial tax if you withdraw a large amount in one year. If a loan interest rate is lower than the tax rate consider getting a loan and using the IRA to pay it off over the life of the loan. If married for 10 years in the USA your wife qualify for social security payments 50% of the amount you qualify for (not receive). Getting her USA citizen might be worth it if her SS payment is less than that 50% amount. I am not sure she has to be a US citizen to receive it, green card I believe is enough.


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## Yugioh (Sep 21, 2013)

Thanks for your comments! Though I am a newbie to this forum and I am impressed at quality of replies I am getting. Two things I learned from this thread I will be looking at: Getting my wife US citizenship and loan to fund our retirement prop in PI. She has her green card for 25 yrs now. We thought this would be an advantage in acquiring Phils properties but things has change over time (Phils laws and approaching retirement). 

We thought about transferring one of my wife's previous employers 401-k account to a "self- directed" IRA Custodian with plans to purchase Phils land for retirement. So far I still have not find the blueprint to do it with assurance I will not be disadvantaged by US and Phil laws.


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## JimnNila143 (Jul 23, 2013)

*Dual Citizenship*



Yugioh said:


> Thanks for your comments! Though I am a newbie to this forum and I am impressed at quality of replies I am getting. Two things I learned from this thread I will be looking at: Getting my wife US citizenship and loan to fund our retirement prop in PI. She has her green card for 25 yrs now. We thought this would be an advantage in acquiring Phils properties but things has change over time (Phils laws and approaching retirement).
> 
> We thought about transferring one of my wife's previous employers 401-k account to a "self- directed" IRA Custodian with plans to purchase Phils land for retirement. So far I still have not find the blueprint to do it with assurance I will not be disadvantaged by US and Phil laws.


You have two options here, since your wife is a Citizen of the Republic of the Philippines. First option is for you to get her US Citizenship, which takes 3 years. Second option is to go for Dual Citizenship which takes 5 years. By her having dual citizenship she can own land/property in both countries. US law states that a US Citizen can own land/property in their name. In the Philippines, only she can own the land, in her name, you can own the dwelling that sits on that land. Another thing that you must consider, in the Philippines, the age of 55 is the limit to get a bank loan to buy land and/or property with a dwelling. If you both are under the age of 66, any early withdrawal on an IRA account will get a substantial tax bite. If you are over 66 years you are not taxed on what is in the IRA account except for what you withdraw from it. Remember, too, that an IRA account is tax deferred until withdrawals begin. Make sure, too, that if you do build a house on the land that you purchase, put the dwelling in both of your names. Also, make sure that you have an insurance policy that should anything happen to either of you, the land and dwelling is paid for in full. Term Insurance would be the best way to go for this.


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## Phil_expat (Jan 3, 2011)

JimnNila143 said:


> You have two options here, since your wife is a Citizen of the Republic of the Philippines. First option is for you to get her US Citizenship, which takes 3 years. Second option is to go for Dual Citizenship which takes 5 years. By her having dual citizenship she can own land/property in both countries. US law states that a US Citizen can own land/property in their name. In the Philippines, only she can own the land, in her name, you can own the dwelling that sits on that land. Another thing that you must consider, in the Philippines, the age of 55 is the limit to get a bank loan to buy land and/or property with a dwelling. If you both are under the age of 66, any early withdrawal on an IRA account will get a substantial tax bite. If you are over 66 years you are not taxed on what is in the IRA account except for what you withdraw from it. Remember, too, that an IRA account is tax deferred until withdrawals begin. Make sure, too, that if you do build a house on the land that you purchase, put the dwelling in both of your names. Also, make sure that you have an insurance policy that should anything happen to either of you, the land and dwelling is paid for in full. Term Insurance would be the best way to go for this.


There are a few things about your post that puzzle me, please comment. My friends got their wife’s US citizen ship in 2 years, I know the time may vary. Do you mean duel citizen for the wife? If so do you mean in the USA? As long as she has a Philippine passport she is a duel citizen, both countries recognize it. I was able to withdraw from my IRAs at age 59.5 with no penalties not 66. You are never tax on what is in an IRA account or gains in the account , that is what an IRA is for. You are tax on withdrawal as income since it was deducted when contributing.


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## overmyer (Aug 15, 2013)

Phil_expat said:


> There are a few things about your post that puzzle me, please comment. My friends got their wife’s US citizen ship in 2 years, I know the time may vary. Do you mean duel citizen for the wife? If so do you mean in the USA? As long as she has a Philippine passport she is a duel citizen, both countries recognize it. I was able to withdraw from my IRAs at age 59.5 with no penalties not 66. You are never tax on what is in an IRA account or gains in the account , that is what an IRA is for. You are tax on withdrawal as income since it was deducted when contributing.


There are two basic types of IRA. The "traditional" IRA is contributed to with pre-tax moneys and are subject to being taxed as income upon withdrawal. The advantage is that it can reduce taxes paid "now" by reducing present income and lower your tax burden at retirement if you will be in lower tax bracket at that time. Then there is the Roth IRA which is contributed to with already taxed income. This IRA is not subject to tax as income because you've already paid those taxes.


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