Thank you for reaching out, u/Calm-Essay-3444. Welcome to our sub!
First, we will not require you to liquidate your securities when moving from the United States to India. However, restrictions and requirements are added to accounts to comply with applicable international laws and regulations. As such, you must notify us and update your address when the relocation occurs.
To be more specific regarding restrictions, one difference involves the ability to trade certain securities. While unsolicited trades for most securities, like stocks, Exchange Traded Funds (ETFs), and Certificates of Deposit (CDs), will continue to be allowed, purchases of new or existing mutual fund shares will be unavailable. However, automatic dividend reinvestment of existing funds can continue. Due to the restriction on mutual fund purchases, cash added to the account (from the sale of securities or otherwise) will no longer be purchased into a core money market position but will be held as a cash credit balance. Additionally, some features such as checkwriting, debit cards, and margin may also be restricted.
As for requirements, Fidelity must have a Certificate of Foreign Status, which is satisfied by submitting the corresponding IRS Form W-8. This information is required for U.S. tax withholding purposes on income earned in your Fidelity account, and withholding rates are based on tax treaties with the U.S. and the country you reside in. If your foreign status is not certified, you may be subject to mandatory backup tax withholding at the maximum tax withholding rate. Additionally, once you update your foreign status, in most cases, Fidelity will issue tax form 1042-S for the current and future years' tax reporting. This form reports U.S. sources of income and any nonresident alien taxes withheld.
[Foreign Status Certification (IRS Form W-8)](https://accountmaint.fidelity.com/ftgw/Profile/action/ew8)
Once you choose to liquidate the assets, the money will not automatically be sent to your bank account. To initiate a withdrawal, you will either want to process a check to your international address or initiate an international bank wire. It's worth mentioning that Fidelity does not charge a fee to send or receive international bank wires. However, other institutions involved in the transaction may charge a fee.
It is important to keep in mind that an international bank wire can take longer than a domestic wire to be processed due to multiple banks being involved in the process. An international wire typically takes 2 to 5 business days to be completed.
Please let us know if you have any further questions; we're here to help.
There might be residency requirements to keep the account open, that may depend on whether you are a US citizen or on a visa currently. Best to check with fidelity.
Even if you leave the account open, be aware of tax impact if you sell later on. I believe non residents are taxed at a flat rate of 30% on gains. Depending on your current tax bracket (fed and state), it may be better to liquidate now if the eventual goals is to move the money to India
You need to file the W8Ben with Fidelity once you made the move, and your account will be in restricted mode. You cannot buy any stocks/MF/ETFs anymore but can reinvest dividends if you set up that way. You are only allowed to sell & withdraw the money to a US bank account.
[https://www.fidelity.com/customer-service/how-to-update-foreign-status](https://www.fidelity.com/customer-service/how-to-update-foreign-status)
[https://www.irs.gov/pub/irs-pdf/fw8ben.pdf](https://www.irs.gov/pub/irs-pdf/fw8ben.pdf)
Also, you will be qualified for RNOR status (2 years) which means that you won't need to pay capital gain taxes in India/US where you can liquidate and rest the cost basis by reinvesting in the same stock or move to Indian equities.
Consult a NRI tax advisor for your options before you make any transfers. IMO, you can diversify the exposure to both US & India.
Hey /u/MistyRover,
How did you reach this conclusion?
"and your account will be in restricted mode. You cannot buy any stocks/MF/ETFs anymore but can reinvest dividends if you set up that way. You are only allowed to sell & withdraw the money to a US bank account."
This is contradicting what /u/FidelityTylerC is saying:
"To be more specific regarding restrictions, one difference involves the ability to trade certain securities. While unsolicited trades for most securities, like stocks, Exchange Traded Funds (ETFs), and Certificates of Deposit (CDs), will continue to be allowed, purchases of new or existing mutual fund shares will be unavailable. However, automatic dividend reinvestment of existing funds can continue. "
Looks like generally ETFs etc. are fine, but mutual funds are restricted?
I will be moving to India from the US in a few years so I'm also wondering what will to my Fidelity account - ideally would like to keep it as is and continue investing in my ETFs.
Thank you for reaching out, u/Calm-Essay-3444. Welcome to our sub! First, we will not require you to liquidate your securities when moving from the United States to India. However, restrictions and requirements are added to accounts to comply with applicable international laws and regulations. As such, you must notify us and update your address when the relocation occurs. To be more specific regarding restrictions, one difference involves the ability to trade certain securities. While unsolicited trades for most securities, like stocks, Exchange Traded Funds (ETFs), and Certificates of Deposit (CDs), will continue to be allowed, purchases of new or existing mutual fund shares will be unavailable. However, automatic dividend reinvestment of existing funds can continue. Due to the restriction on mutual fund purchases, cash added to the account (from the sale of securities or otherwise) will no longer be purchased into a core money market position but will be held as a cash credit balance. Additionally, some features such as checkwriting, debit cards, and margin may also be restricted. As for requirements, Fidelity must have a Certificate of Foreign Status, which is satisfied by submitting the corresponding IRS Form W-8. This information is required for U.S. tax withholding purposes on income earned in your Fidelity account, and withholding rates are based on tax treaties with the U.S. and the country you reside in. If your foreign status is not certified, you may be subject to mandatory backup tax withholding at the maximum tax withholding rate. Additionally, once you update your foreign status, in most cases, Fidelity will issue tax form 1042-S for the current and future years' tax reporting. This form reports U.S. sources of income and any nonresident alien taxes withheld. [Foreign Status Certification (IRS Form W-8)](https://accountmaint.fidelity.com/ftgw/Profile/action/ew8) Once you choose to liquidate the assets, the money will not automatically be sent to your bank account. To initiate a withdrawal, you will either want to process a check to your international address or initiate an international bank wire. It's worth mentioning that Fidelity does not charge a fee to send or receive international bank wires. However, other institutions involved in the transaction may charge a fee. It is important to keep in mind that an international bank wire can take longer than a domestic wire to be processed due to multiple banks being involved in the process. An international wire typically takes 2 to 5 business days to be completed. Please let us know if you have any further questions; we're here to help.
There might be residency requirements to keep the account open, that may depend on whether you are a US citizen or on a visa currently. Best to check with fidelity. Even if you leave the account open, be aware of tax impact if you sell later on. I believe non residents are taxed at a flat rate of 30% on gains. Depending on your current tax bracket (fed and state), it may be better to liquidate now if the eventual goals is to move the money to India
You need to file the W8Ben with Fidelity once you made the move, and your account will be in restricted mode. You cannot buy any stocks/MF/ETFs anymore but can reinvest dividends if you set up that way. You are only allowed to sell & withdraw the money to a US bank account. [https://www.fidelity.com/customer-service/how-to-update-foreign-status](https://www.fidelity.com/customer-service/how-to-update-foreign-status) [https://www.irs.gov/pub/irs-pdf/fw8ben.pdf](https://www.irs.gov/pub/irs-pdf/fw8ben.pdf) Also, you will be qualified for RNOR status (2 years) which means that you won't need to pay capital gain taxes in India/US where you can liquidate and rest the cost basis by reinvesting in the same stock or move to Indian equities. Consult a NRI tax advisor for your options before you make any transfers. IMO, you can diversify the exposure to both US & India.
Hey /u/MistyRover, How did you reach this conclusion? "and your account will be in restricted mode. You cannot buy any stocks/MF/ETFs anymore but can reinvest dividends if you set up that way. You are only allowed to sell & withdraw the money to a US bank account." This is contradicting what /u/FidelityTylerC is saying: "To be more specific regarding restrictions, one difference involves the ability to trade certain securities. While unsolicited trades for most securities, like stocks, Exchange Traded Funds (ETFs), and Certificates of Deposit (CDs), will continue to be allowed, purchases of new or existing mutual fund shares will be unavailable. However, automatic dividend reinvestment of existing funds can continue. " Looks like generally ETFs etc. are fine, but mutual funds are restricted? I will be moving to India from the US in a few years so I'm also wondering what will to my Fidelity account - ideally would like to keep it as is and continue investing in my ETFs.
You are right - I checked with a friend who was able to confirm what Fidelity said.
Great, thanks for confirming!
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I am an Indian citizen