Living in the USA with Swiss Ties –
Financial Planning Implications
The United States government does not provide as broad a safety net as the Swiss government does for its residents. As a result, US residents are used to taking a more active role in managing risk and building wealth to support themselves in retirement. This can be intimidating for Swiss nationals moving to the USA for the first time. It also requires a shift in mindset for Americans returning to the USA after decades living abroad.
We can help you manage your international relocation and efficiently coordinate your US and Swiss finances. Whether you are moving to the USA for the first time and need to learn your new environment, you are a Swiss family that has been living in the USA for a number of years, or you are an American family returning home after years living in Switzerland.
We can help you manage your:
- Pre-immigration tax planning: Like Switzerland, the USA taxes its residents on their worldwide income. Unlike Switzerland, the United States doesn’t have a wealth tax, but it taxes capital gains on financial investments even if the appreciation of the investment happened before the owner moved to the USA. We can help develop an efficient tax plan to step-up your cost basis on those assets prior to becoming a US tax resident. This can result in potentially significant tax savings.
- PFICs (Passive Foreign Investment Companies): The US taxes non-US mutual funds, exchange traded funds (ETFs) and other pooled investments that are not US registered as (PFICs). PFICs require complex tax reporting and are subject to punitive taxation. We can help you restructure your Swiss investments, such as making favorable US tax elections. This will reduce the tax burden on non-US investments without negatively impacting your investment returns.
- Bank accounts: Some Swiss banks increase their clients’ account fees or force them to close their accounts after giving up Swiss residency. We can help you evaluate your options and structure your bank accounts and deposits to minimize disruptions, unnecessary costs, and risks.
- Pension distributions: US tax laws do not recognize Swiss Pillars 2 and Pillars 3 as qualified retirement accounts. When moving to the USA for the first time, capital distributions of Pillars 2 and 3 are fully taxed in the USA as income if taken after becoming a US tax resident. We can help you plan your US tax residency start date at the federal and state level, to reduce or eliminate these taxes. Rolling over a Pillar 3 account or rolling over your Pillar 2 to a Vested Benefits Account can also have income tax and PFIC consequences that we can help you understand, plan for and minimize.
- Reporting requirements: US tax residents are required to annually report their foreign financial assets in their US income tax returns and FBAR Form FinCEN 114. These requirements apply to Swiss bank accounts, Swiss pensions and investment accounts, ownership of Swiss corporations and partnerships, real estate, certain insurance products, etc. Ownership of at least 10% of a non-US company such as a SA or AG, Sarl or GmbH, can trigger additional reporting requirements with different levels of complexity. We can help you understand the requirements that apply to your situation, avoid penalties and remain in full compliance.
- Tax treaties: There are three tax treaties between the USA and Switzerland: for income taxes, for social security taxes (Totalization Agreement), and for estate taxes. We can help you navigate the treaties and claim any benefits that are relevant to your situation.
- Insurance: Coverage for disability and life insurance is not automatic or mandated by US law. Unlike Switzerland, US employers generally provide very limited coverage and it is up to the individual employee to obtain this coverage themselves. We can help you select and obtain the right level of insurance coverage based on your personal circumstances and needs.
- Estate planning: Unlike Switzerland, there are no forced heirship rules in the USA. We can help you understand the estate implications of becoming US domiciled. We can work with estate attorneys to put together an estate plan that addresses your needs and accounts for your US and Swiss assets.
- Other considerations: international moves are costly and complex. We can help you budget for and manage those expenses, manage foreign exchange rate risk, make international money transfers, select the most appropriate employee benefits, understand your executive compensation, and open and manage US investment accounts
If you are a US citizen relocating back to the USA from Switzerland or are Swiss but have been living in the USA for a while, you may already be familiar with some of these issues. Some considerations change once you become a US tax resident, particularly as they related to the taxation of Swiss pension distributions and foreign investment funds. We can help you evaluate your options and make the choices that provide the best return for you, based on your personal situation and goals.
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Yes. In addition to traditional portfolio solutions, we offer sustainable investment portfolios that account for Environmental, Social and Governance (ESG) factors. ESG data on companies has become increasingly available over the last few years. This allows us to offer portfolios built with ETFs (exchange-traded funds) that exclude certain industries such as weapons manufacturers or tobacco companies. Industries included might focus on a particular theme, or aim to have a positive impact by promoting positive and limiting negative externalities. Investing in ESG portfolios involves risks, please refer to our ADV for more details.
Yes. We offer alternative investments such as private investments, hedge funds, and cryptocurrencies if you qualify as an accredited investor and when these investments are appropriate for your situation and are aligned with your financial plan. Some of these alternative investments may also be available to non-accredited investors. Investing in alternatives and cryptocurrencies involves risks, please refer to our ADV for more details.
Yes. We offer direct/personalized indexing when this investment strategy is appropriate for your situation. With direct/personalized indexing, you own the underlying securities in the portfolio, rather than shares of an investment fund. This approach provides additional opportunities to personalize your investments and potentially gain greater tax efficiency through daily tax-loss harvesting. Direct indexing involves risks, please refer to our ADV for more details.
We believe that every person deserves access to quality financial education that can empower them to make good financial decisions. For individuals and families who are unable to engage us for our professional services, our blog and educational videos provide free educational resources. Additionally, we regularly conduct educational workshops, covering topics like tax reporting, tax planning, saving for retirement, risk management, and legacy planning. To inquire about our next educational workshop, please email us at firstname.lastname@example.org
To minimize conflicts of interest and seek better alignment with our clients, we do not accept sales commissions or referral fees from investment product providers or independent professionals. We only receive compensation in the form of financial advisory fees paid by our clients as detailed in their financial planning advisory agreements. Our clients pay us a transparent fee for our advice.
We work hard to make sure your money is safe. We are members of a fee-only Registered Investment Advisor (RIA) with over $3 billion in assets under management serving approximately 5,000 families. We work only with top financial institutions like Charles Schwab and Fidelity as our independent custodians, and we use leading industry technology for investment management and financial planning. We hold multiple professional credentials, and we are held to a fiduciary standard, which means that we are required to always provide advice that is in your best interest, even when it’s against our own.
We offer US insurance services through our sister firm, Swiss American Risk Advisors. We have teamed up with Ash Brokerage to offer independent insurance solutions when needed. Please refer to our disclosures at the bottom of this page.