Author Topic: Can Non-Resident Aliens open IRAs?  (Read 33748 times)

nanu

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Can Non-Resident Aliens open IRAs?
« on: February 20, 2015, 04:11:12 PM »
I have a taxable account with Vanguard and called them up to open a Roth IRA for 2014,
and they said that because I'm a Non-Resident Alien (I'm a student on F-1 visa) I can't open an IRA.
However, I'm now chatting up Fidelity and they said there's no problem...

Anyone know what's up with that? I'd rather open the IRA with Vanguard (since my taxable account
is with them, and my [future] employer 401K will be with them as well) so that my accounts won't be fragmented as much.

rpr

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Re: Can Non-Resident Aliens open IRAs?
« Reply #1 on: February 20, 2015, 07:38:03 PM »
I have a taxable account with Vanguard and called them up to open a Roth IRA for 2014,
and they said that because I'm a Non-Resident Alien (I'm a student on F-1 visa) I can't open an IRA.
However, I'm now chatting up Fidelity and they said there's no problem...

Anyone know what's up with that? I'd rather open the IRA with Vanguard (since my taxable account
is with them, and my [future] employer 401K will be with them as well) so that my accounts won't be fragmented as much.
I get the general feeling that Vanguard is pretty finicky about "phoren" peoples. Even US citizens residing abroad have difficulty with Vanguard.

My understanding is (and I'm neither a CPA or Tax expert) that you can contribute to an IRA if you have any earned income reported to you on a W-2. If you get fellowship and or scholarship income that is unearned and not reported via a W-2, then you cannot use that income for contributing to an IRA. But, that fellowship or scholarship income may still be considered taxable (and unearned) income.

If you leave the US after graduating, then there maybe issues with taxation depending on the country you move to. That is something you may have to consider.

nanu

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Re: Can Non-Resident Aliens open IRAs?
« Reply #2 on: February 20, 2015, 08:15:10 PM »
Thanks Cathy, but what Vanguard seemed to say is that non-resident aliens are prohibited from opening IRAs because of some IRS/immigration,
not that they don't feel like opening me one because they hate foreigners or something.

rpr, I do have income reported on W-2 so that's not a problem, and taxation in other countries (i.e. back home) isn't really a problem I think.

So I guess I'll just open an IRA account with Fidelity and that's it...

Paul der Krake

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Re: Can Non-Resident Aliens open IRAs?
« Reply #3 on: February 20, 2015, 08:53:47 PM »
Keep in mind that there's a distinction between being a non-resident for immigration purposes and for tax purposes.

I checked the "resident alien" box back when on a J-1 and no one has sent the IRA cops after me yet.

josstache

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Re: Can Non-Resident Aliens open IRAs?
« Reply #4 on: February 20, 2015, 10:37:12 PM »
Keep in mind that there's a distinction between being a non-resident for immigration purposes and for tax purposes.

I checked the "resident alien" box back when on a J-1 and no one has sent the IRA cops after me yet.

"Foreign students who arrive in the United States on F-1, J-1, M-1, Q-1 or Q-2 visas are considered to be exempt individuals during the first five calendar years of their physical presence in the United States. . . . Foreign students in F-1, J-1, M-1, Q-1 or Q-2 nonimmigrant status who have been in the United States more than 5 calendar years are RESIDENT ALIENS and are liable for social security/Medicare taxes. . . ."

I imagine filing as a resident alien, even when you are entitled to file as a non-resident, would likely only increase your US tax liability, so I wouldn't expect the IRS cops to care about that.
« Last Edit: February 20, 2015, 10:38:57 PM by josstache »

rpr

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Re: Can Non-Resident Aliens open IRAs?
« Reply #5 on: February 20, 2015, 10:43:29 PM »

Keep in mind that there's a distinction between being a non-resident for immigration purposes and for tax purposes.

I checked the "resident alien" box back when on a J-1 and no one has sent the IRA cops after me yet.

"Foreign students who arrive in the United States on F-1, J-1, M-1, Q-1 or Q-2 visas are considered to be exempt individuals during the first five calendar years of their physical presence in the United States. . . . Foreign students in F-1, J-1, M-1, Q-1 or Q-2 nonimmigrant status who have been in the United States more than 5 calendar years are RESIDENT ALIENS and are liable for social security/Medicare taxes. . . ."

I imagine filing as a resident alien, even when you are entitled to file as a non-resident, would likely only increase your US tax liability, so I wouldn't expect the IRS cops to care about that.
That depends on the tax treaty. If you don't have a tax treaty, then usually filing as NR, you cannot claim standard deduction. It can be bad if you don't have any itemized deductions. So filing as a resident alien can be a lower tax liability under these circumstances.


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goodrookie

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Re: Can Non-Resident Aliens open IRAs?
« Reply #6 on: February 20, 2015, 11:00:32 PM »
I have a taxable account with Vanguard and called them up to open a Roth IRA for 2014,
and they said that because I'm a Non-Resident Alien (I'm a student on F-1 visa) I can't open an IRA.
However, I'm now chatting up Fidelity and they said there's no problem...

Anyone know what's up with that? I'd rather open the IRA with Vanguard (since my taxable account
is with them, and my [future] employer 401K will be with them as well) so that my accounts won't be fragmented as much.

Stop stealing American job.

Paul der Krake

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Re: Can Non-Resident Aliens open IRAs?
« Reply #7 on: February 21, 2015, 05:23:08 AM »
I have a taxable account with Vanguard and called them up to open a Roth IRA for 2014,
and they said that because I'm a Non-Resident Alien (I'm a student on F-1 visa) I can't open an IRA.
However, I'm now chatting up Fidelity and they said there's no problem...

Anyone know what's up with that? I'd rather open the IRA with Vanguard (since my taxable account
is with them, and my [future] employer 401K will be with them as well) so that my accounts won't be fragmented as much.

Stop stealing American job.


nanu

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Re: Can Non-Resident Aliens open IRAs?
« Reply #8 on: February 21, 2015, 05:44:35 AM »
Thanks everyone for helping out.
As far as I understand it, I'm considered a non resident alien for tax purposes because I can't count any days
of stay while in the US (because F-1 students are exempt from counting days).

Is this good or bad for my tax liability? I'm not sure actually. I can claim about $3k as a deduction because of a tax treaty,
and I don't pay FICA, but I can't take the standard deduction (and up until now, my state taxes were lower than the deduction. that might change this/next year).

I guess it's just Vanguard's policy (for some odd reason) to not let NRA open IRAs and such, so I'm probably
gonna go with Fidelity unless someone has a better recommendation. Any recommendations on index funds/ETFs that I can buy through them?

Stop stealing American job.
Oh shut up.

Paul der Krake

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Re: Can Non-Resident Aliens open IRAs?
« Reply #9 on: February 21, 2015, 05:56:45 AM »
I guess it's just Vanguard's policy (for some odd reason) to not let NRA open IRAs and such, so I'm probably
gonna go with Fidelity unless someone has a better recommendation. Any recommendations on index funds/ETFs that I can buy through them?
The usual recommendation around here is to look into their Spartan funds, they are Fidelity's line of low cost index funds:

https://www.fidelity.com/mutual-funds/index-funds/why-fidelity

goodrookie

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Re: Can Non-Resident Aliens open IRAs?
« Reply #10 on: February 21, 2015, 03:12:46 PM »
I have a taxable account with Vanguard and called them up to open a Roth IRA for 2014,
and they said that because I'm a Non-Resident Alien (I'm a student on F-1 visa) I can't open an IRA.
However, I'm now chatting up Fidelity and they said there's no problem...

Anyone know what's up with that? I'd rather open the IRA with Vanguard (since my taxable account
is with them, and my [future] employer 401K will be with them as well) so that my accounts won't be fragmented as much.

Stop stealing American job.


If you live in an apartment with 6 other people, rely on emergency room rather than health insurance and willing to work below the wage, then yes you are stealing American job. A decent American with family can't compete with a foreigner who is willing to tolerate third world country living conditions.

TXBruiser

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Re: Can Non-Resident Aliens open IRAs?
« Reply #11 on: February 21, 2015, 03:51:51 PM »
I have a taxable account with Vanguard and called them up to open a Roth IRA for 2014,
and they said that because I'm a Non-Resident Alien (I'm a student on F-1 visa) I can't open an IRA.
However, I'm now chatting up Fidelity and they said there's no problem...

Anyone know what's up with that? I'd rather open the IRA with Vanguard (since my taxable account
is with them, and my [future] employer 401K will be with them as well) so that my accounts won't be fragmented as much.

Stop stealing American job.


If you live in an apartment with 6 other people, rely on emergency room rather than health insurance and willing to work below the wage, then yes you are stealing American job. A decent American with family can't compete with a foreigner who is willing to tolerate third world country living conditions.

Please tell me your joking goodrookie... The guy just said his future employers 401K will be with Vangaurd... Ive never heard of an employer paying employees "to work below the wage" and still offer them a 401K option.  Not to mention, nanu is looking into opening an IRA... a good portion of Americans don't even know what a IRA is... maybe he should stay and we should kick some of the Americans that choose the flat screen TVs and new cars over 401Ks and IRAs because they are banking on the government (ie. us) to bail them out when they are broke.  Looks like nanu is what we want in an country, I wish all Americans were so forward thinking as nanu is. 
« Last Edit: February 21, 2015, 03:54:06 PM by TXBruiser »

goodrookie

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Re: Can Non-Resident Aliens open IRAs?
« Reply #12 on: February 21, 2015, 04:28:48 PM »
Think of the situation this way. If a computer programmer is willing to work for $12-14/hour while the industry standard is $30-40/hour, he is working below the wage. It is irrelevant that he is making more than the minimum wage or his employer offers 401k. 

nanu

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Re: Can Non-Resident Aliens open IRAs?
« Reply #13 on: February 21, 2015, 05:30:50 PM »
If you live in an apartment with 6 other people, rely on emergency room rather than health insurance and willing to work below the wage, then yes you are stealing American job. A decent American with family can't compete with a foreigner who is willing to tolerate third world country living conditions.
This is the stupidest post I have seen on this forum (thus far...).

Living in an apartment with 6 other people is a great way to save money. Ever heard of dorms?
Relying on emergency room rather than having health insurance is what a great deal of Americans do, especially before Obamacare.
Willing to work below the minimum wage is the only point that is relevant, and I don't think anyone working below minimum wage would be able to contribute to an IRA.

You're just like all the idiots who claim not spending all of your income is "unpatriotic".

Think of the situation this way. If a computer programmer is willing to work for $12-14/hour while the industry standard is $30-40/hour, he is working below the wage. It is irrelevant that he is making more than the minimum wage or his employer offers 401k. 
The lowest figure I could possibly get to is that I'll be making $50/hour, excluding any and all benefits, yearly bonus, and stocks.
Still want to talk about working "working below the wage" or are you simply upset because you can't find a nice job?

TXBruiser

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Re: Can Non-Resident Aliens open IRAs?
« Reply #14 on: February 21, 2015, 05:43:16 PM »
This is the stupidest post I have seen on this forum (thus far...).

^^^ I Second This

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« Last Edit: February 22, 2015, 09:06:59 AM by arebelspy »

goodrookie

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Re: Can Non-Resident Aliens open IRAs?
« Reply #15 on: February 21, 2015, 06:08:30 PM »

You're just like all the idiots who claim not spending all of your income is "unpatriotic".


Now this is the stupidest comment I have heard in a while.

MOD NOTE:  Stop it.
« Last Edit: February 22, 2015, 09:07:14 AM by arebelspy »

nanu

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Re: Can Non-Resident Aliens open IRAs?
« Reply #16 on: February 21, 2015, 06:25:10 PM »

You're just like all the idiots who claim not spending all of your income is "unpatriotic".


Now this is the stupidest comment I have heard in a while.
Then maybe you should read aloud your posts before posting

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« Last Edit: February 22, 2015, 09:07:29 AM by arebelspy »

goodrookie

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Re: Can Non-Resident Aliens open IRAs?
« Reply #17 on: February 21, 2015, 06:29:32 PM »

You're just like all the idiots who claim not spending all of your income is "unpatriotic".


Now this is the stupidest comment I have heard in a while.
Then maybe you should read aloud your posts before posting

Is that how you read your books, Nanu?


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« Last Edit: February 22, 2015, 09:07:42 AM by arebelspy »

arebelspy

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Re: Can Non-Resident Aliens open IRAs?
« Reply #18 on: February 22, 2015, 09:08:41 AM »
MOD NOTE: 3 day warning bans issued.  Stop being jerks and get back on topic.  Thanks.
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Dulcimina

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Re: Can Non-Resident Aliens open IRAs?
« Reply #19 on: February 23, 2015, 11:36:35 AM »
and I don't pay FICA, but I can't take the standard deduction (and up until now, my state taxes were lower than the deduction. that might change this/next year).


How are you paid? Is it considered a taxable grant? Do you receive a 1042S, 1099G, 1099MISC,  etc., instead of a W2?  When I was in a similar situation (many, many years ago so much could have changed since then), I was told that my pay was considered by the school as a taxable grant and not wages and  I was therefore ineligible for an IRA.  I never received a W2.

nanu

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Re: Can Non-Resident Aliens open IRAs?
« Reply #20 on: February 25, 2015, 09:33:10 AM »
The scholarship that I get is indeed not taxable and doesn't count as wage earned, but various other things (work during the year, summer internship) are and I do have a W2 from those

Hey It's Me

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Re: Can Non-Resident Aliens open IRAs?
« Reply #21 on: February 25, 2015, 03:30:17 PM »
Think of the situation this way. If a computer programmer is willing to work for $12-14/hour while the industry standard is $30-40/hour, he is working below the wage. It is irrelevant that he is making more than the minimum wage or his employer offers 401k.

This is why we don't feed the trolls; they're always hungry.

nanu

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Re: Can Non-Resident Aliens open IRAs?
« Reply #22 on: February 25, 2015, 03:55:28 PM »
While on the subject, do I need to submit any tax documents if I contribute to a Roth IRA or mention it on my 1040NR?

rpr

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Re: Can Non-Resident Aliens open IRAs?
« Reply #23 on: February 25, 2015, 07:17:37 PM »

However, since you are a nonresident alien, you are most likely still a resident of another country for tax purposes. In other words, you should still be filing as a resident in some other country.

Some countries only tax income received when you are actually physically present and resident and not on your worldwide income. Thus, the OP maybe considered a resident of another country but with no tax filing requirements.

nanu

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Re: Can Non-Resident Aliens open IRAs?
« Reply #24 on: February 25, 2015, 07:57:32 PM »
You do not need to report Roth IRA contributions on Form 1040NR.
So the rules about Roth IRA (who can contribute and such) are only enforced if I get audited I guess?

However, since you are a nonresident alien, you are most likely still a resident of another country for tax purposes. In other words, you should still be filing as a resident in some other country. A Roth IRA is a trust. Many countries require you to report contributions to foreign trusts on your tax return. So you may need to report the contributions on the return for your home country.
As (I think) I mentioned above, this doesn't really matter to me, but thank you.

Goldielocks

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Re: Can Non-Resident Aliens open IRAs?
« Reply #25 on: February 25, 2015, 08:21:45 PM »
This may not be an IRA issue, but rather that non residents can't open brokerage accounts that trade securities at us banks... 

The bank that said yes, may require you to keep funds in cash or cash like (limited) investments.

Anyway, that is what happens at. Wells Fargo..

MikeBear

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Re: Can Non-Resident Aliens open IRAs?
« Reply #26 on: February 25, 2015, 11:12:40 PM »
I wonder if you could do this: Open an IRA with Fidelity, then 1 year later "roll it over" to Vanguard...

nanu

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Re: Can Non-Resident Aliens open IRAs?
« Reply #27 on: February 26, 2015, 06:23:43 AM »
I wonder if you could do this: Open an IRA with Fidelity, then 1 year later "roll it over" to Vanguard...
I thought about this... But I don't think I'll bother doing this for now.
I'll probably just keep it with Fidelity for the time being.