What is a self-directed IRA?

A self-directed individual retirement account (IRA) is a retirement plan that allows account owners to use alternative investments to build retirement wealth. Plan owners have control over their own funds and investing decisions as well as the option to work together with an independent asset manager. IRAs and self-directed IRAs offer the same tax-sheltered benefits and are governed by the same IRS rules and regulations. However, a self-directed IRA has two significant advantages that a typical IRA does not offer: Account owners have control over their retirement funds and the freedom to choose alternative investments to build wealth. Traditional IRAs allow you to save pre-tax money for retirement. If you are eligible to deduct contributions on your income taxes now and you anticipate a lower tax rate in retirement, then this is a good plan to consider. There are several types of IRAs but we, at WHVP, manage “Traditional IRAs” and “Roth IRAs”, administrated by a US trust Company.

Some key features of IRA accounts: 

• Contributions are often tax-deductible. 
• All transactions and earnings within the IRA have no tax impact.
• Withdrawals at retirement are taxed as income (except for portions of the withdrawal corresponding to contributions that are not deducted). 

Why move your self-directed IRA offshore?

If you are like most Americans, your assets are probably 100% in US dollar – your bank accounts, retirement plans, etc. Due to the long-term demise of the US dollar, these assets are losing value. How can you protect yourself? We would like to share with you the four key advantages of investing offshore: 

1. Access to Investment Opportunities: International investments are extremely helpful in geographically diversify your wealth. How can you gain access and expertise in these other markets? In most cases not through a US broker. Sure, a few boutique firms specialize in international shares, but to experience the full richness of international markets, an offshore bank account and an independent asset manager based in another region is a huge benefit. 
2. Protection against a sinking domestic currency: Over the past decades, the value of the US dollar has declined. The question therefore has to be; how can you protect yourself from the loss in value of your investments? There is an easy, safe, and conservative way – purchasing shares and bonds denominated in foreign currencies such as the ever-strong Swiss franc. 
3. Protection from professional liability and other claims: Many Americans rely on domestic laws and instruments to protect their wealth from frivolous lawsuits. However, there are considerable variations between states, and some states provide little or no protection. In contrast, asset protection laws in countries such as Switzerland are usually enforced without local variations. The bottom line: When someone wants to sue you and discovers that your assets are offshore, they will often pursue an easier target. 
4. Enhanced privacy protection: Your wealth, spending habits and almost every other detail of your financial life is under scrutiny in the US. The US is one of the few nations where it is legal for banks and other financial services to disclose information about your accounts without your permission and without probable cause of wrongdoing. As a result, the army of information brokers, which advertise their ability to uncover assets, will not be able to pry information out of an offshore bank.

The Set-up

The account set-up for a self-directed IRA managed by WHVP is done through a US administrator. As the client’s IRA custodian, the administrator is concerned only with making investments of the client’s choosing, protecting their assets while they are in the IRA and performing all duties of an IRA custodian. They do not offer or sell any investments, nor are they affiliated with any dealer. They do not give tax or legal advice and they do not benefit financially from the client’s investment choices.

WHVP is the investment manager and the main contact person of the client, but the assets are held at a private bank either in Switzerland, Liechtenstein or Austria. The set-up and contractual relationship between the various parties looks as shown in the graph on the top right of this paragraph. However, it is important to keep in mind that WHVP is working with you through the whole process and works as a mediator between the different parties, so you do not have to worry about keeping an overview over everything.

The Process

1. The process usually starts with an introduction telephone call between you and WHVP. The goal of the call is to get to know each other talk about your needs and about our service. We talk not only about the different services but also about the possible administrators and custodian banks.
2. We make the introduction to the administrator. They will send you the application form for a non U.S. Bank Self Directed IRA account.
3. You sign and return the forms to the administrator.
4. The administrator informs and instructs us to prepare the bank account opening forms, which will be sent to the administrator as trustee of the IRA account. However, some forms have to be signed by the client as beneficial owner (BO).
5. WHVP encloses their Portfolio Management Mandate (PMM) and additional information to the package for the BO resp. IRA owner.
6. Upon receipt of the original signed forms, WHVP provides the paperwork to the respective bank and informs the administrator once the account is opened.
7. An IRA can only be funded with cash or cash equivalents. Attempting to transfer any other type of asset into the IRA is a prohibited transaction and disqualifies the fund from its beneficial tax treatment. The administrator as custodian resp. administrator is responsible for the correct funding. Therefore, they will transfer the funds to the account according to the wiring instructions they will receive from WHVP. If you have an employer-sponsored plan, you can roll those funds into a self-directed IRA. The account can also be funded by transferring funds from an existing IRA.
8. Once the account is funded we will schedule another telephone call where we talk about the investment strategy and initial investment in more detail. After the call we will start investing and stay in continuous communication with you.

Investments

We apply strict and conservative asset management principles. One of our main targets is capital preservation as well as very personalized service to suit the particular needs of our clientele. We build a tailor-made mandate taking into account personal circumstances, age, time horizon, available capital, investment needs, risk appetite as well as preferences. Generally speaking we build a portfolio consisting of safe haven foreign currencies, investment grade bonds in different currencies, stable and dividend paying equities as well as precious metals.