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How to Transfer a Closed Fidelity Account to an Expat Brokerage

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How to Transfer a Closed Fidelity Account to Another Broker

Fidelity, Merrill Lynch, Wells Fargo and many other U.S. brokers have been closing down their American clients' brokerage accounts due to FACTA (the Foreign Account Tax Compliance Act) which are rules laid down in 2010 that not even the U.S. government adheres to as they haven't signed up to the Common Reporting Standards yet (2018).

The Wall Street Journal reported in July 2014 that "FATCA worsens the already profoundly unjust tax treatment of millions of middle-class Americans living abroad...FATCA rules were intended to correct a tax loophole. Applied to Americans living abroad, they are absurd."

The Guardian reports that Americans living abroad feel financially terrorized by FATCA requirements. In 2013, Robert Stack stated the IRS position that "FATCA withholding applies to the U.S. investments of FFIs whether or not they have U.S. account holders, so turning away known U.S. account holders will not enable an FFI to avoid FATCA.

Marketwatch reported in 2014 that Fidelity had banned US investors from purchasing U.S. mutual funds. 

Fidelity have closed a number of accounts due to FACTA, the stricter Know Your Client (KYC) rules and tougher anti-money laundering rules as well as the problem of not being able to process the purchase and sale of U.S. mutual funds for Americans living abroad.

Many of Fidelity's client accounts have been closed in the wake of money laundering scandals facing Bank of America and the tax disclosure issues in Switzeland, where UBS, Switzerland’s biggest bank and the world’s largest wealth manager, has maintained a large U.S. presence even after paying $780 million in settlements with U.S. authorities over undeclared assets that U.S. clients had held with the bank.

If you have a locked Fidelity account, you might find all this very frustrating, but don't worry, there is a solution.

In this article, we will show you how to close a Fidelity account and transfer the account to an expat friendly brokerage account via a free app which will also automate the trading of ETFs on a clients' behalf.

How to Close a Fidelity Account

If you want to close your Fidelity account, you need to send a closure request to the broker by logging into the Fidelity site and using their internal messaging system or you can ring them internationally and ask a broker to close down your Fidelity brokerage account.

Here is a list of Fidelity's international phone numbers.

Wait for confirmation from Fidelity regarding your account closure. Some accounts charge a fee when they are terminated and a statement is sent specifying this charge. Fidelity must also send you a payment for any funds remaining in your account.

How to Transfer a Fidelity Account

Instead of closing a Fidelity securities account, you could transfer it instead. Most broker-dealers charge a fee for an outgoing transfer, although Fidelity charges nothing. It's one of the few companies to do so. 

Fidelity does impose a $50 charge for closing or transferring an Individual Retirement Account, although regular securities accounts you can transfer for free.

To start the transfer process, you would contact the broker you want to transfer to. Many firms have an on-line form to conduct the movement of assets. You can Interactive Brokers or Charles Schwab directly if you want to open or transfer a brokerage account as an American expat.

Some brokers may allow you to transfer your assets. But, most brokers are not expat friendly, especially not toward Americans living overseas due to FACTA.

Click here for a list of expat friendly brokers.

If you have closed your Fidelity account or exited your positions, you can transfer the cash to an online brokerage account such as Interactive Brokers or Charles Schwa.

IB is an expat friendly brokerage account that can manage your ETF portfolio.

Setting Up a New Brokerage Account for Non-US Expats

The Money Pouch can manage ETF investment portfolios for most expats.

The Money Pouch app is available on Google Play and iTunes. You can download it for free.

The Money Pouch is not available to U.S. residents.

After answering a few simple risk tolerance questions, The Money Pouch will send you a free risk score via email. From there, you can complete the application and upload your passport copy and proof of address for compliance.

The whole process takes less than 10 minutes as you can see in the video below. Then, it may take a few days to clear compliance at Interactive Brokers.




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