Author Topic: US Savings Accounts when not a Citizen  (Read 1212 times)

WorkingOnStubble

  • 5 O'Clock Shadow
  • *
  • Posts: 23
US Savings Accounts when not a Citizen
« on: June 15, 2016, 09:39:04 PM »
Hey guys,

So I'm an English guy working in San Francisco on a pretty permanent basis. I'm no longer considered a resident in the UK, so I can't open tax-free savings accounts there. However, I don't have citizenship in the US, and it's likely that I won't retire in the US either.

My work offers a 401k with no matching whatsoever. I asked our planner what I should do with regards to opening a 401k, and she was warning that if I plan to take it out early then I'm likely to face hefty penalties, and all that jazz. I figured that this forum is full of some people who will definitely be knowledgeable on this topic!

So, I'm now accruing a salary that I spend very little of, and I have nowhere to put it! Help me!

bobechs

  • Handlebar Stache
  • *****
  • Posts: 1068
Re: US Savings Accounts when not a Citizen
« Reply #1 on: June 15, 2016, 10:05:06 PM »
Send it to me and I'll take care of it until you need it.

rpr

  • Pencil Stache
  • ****
  • Posts: 646
Re: US Savings Accounts when not a Citizen
« Reply #2 on: June 15, 2016, 10:15:16 PM »
Hey guys,

So I'm an English guy working in San Francisco on a pretty permanent basis. I'm no longer considered a resident in the UK, so I can't open tax-free savings accounts there. However, I don't have citizenship in the US, and it's likely that I won't retire in the US either.

My work offers a 401k with no matching whatsoever. I asked our planner what I should do with regards to opening a 401k, and she was warning that if I plan to take it out early then I'm likely to face hefty penalties, and all that jazz. I figured that this forum is full of some people who will definitely be knowledgeable on this topic!

So, I'm now accruing a salary that I spend very little of, and I have nowhere to put it! Help me!
Just open a regular taxable account at Vanguard.

Able was I ERE

  • Stubble
  • **
  • Posts: 160
  • Location: Austria
    • FIREhub.eu
Re: US Savings Accounts when not a Citizen
« Reply #3 on: June 16, 2016, 03:29:12 PM »
The US and the UK have a very comprehensive tax treaty that covers retirement accounts.   I believe it allows a UK resident to use 401k and IRA accounts effectively the same way as if you stayed in the US.   

I've read somewhere (but not sure whether this is true) that after you leave the US you can convert traditional balances slowly into Roth (keeping within US standard exemption / deduction limits) and avoid paying both UK and US taxes.

This is definitely worth researching further or getting professional advice. You could save significant amounts of taxes if you can make use of the American retirement accounts.