Author Topic: IRA investments from abroad, need help  (Read 1805 times)

Anette

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IRA investments from abroad, need help
« on: September 21, 2017, 03:13:16 AM »
My husband and I are both resident in Germany, me being German while he is American. He works for an American Consulate and is able to get paid in Euros, but pays his taxes in the US.
Because he is resident in Germany he is not usually able to open a bank account in the US, especially not for investing.
At the same time banks in Germany will let him open an account, but not for investing in stocks, etfs... as they don't want anything to do with the massive amounts of paperwork to be filled in and reported for US Citizens.
A while ago my husband was able to open a bank account with the department of state federal bank. This lead us to think he will finally be able to open a Roth IRA. He was able to do it, but there are no options with this bank to keep the money invested in anything other than a savings account which does not seem profitable given the very low interest rate.
So this far, the only advantage is the tax break for his contributions.
Does anyone have information on how to move forward in this situation? Which banks might let him invest?
 We did try a couple times, talked to lots of people on the phone, send in the necessary paperwork and cheques, only to have everything returned in the end.
Any help / ideas are appreciated!

farfromfire

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Re: IRA investments from abroad, need help
« Reply #1 on: September 21, 2017, 04:42:43 AM »
Servus!

He should be able to open an IRA at TD Ameritrade as a US citizen living overseas. FWIW I've had mostly good experiences with them. Shouldn't he be eligible for a TSP as a federal employee?
Depending on his level of income, he might be better off applying for the federal tax credit instead of the feie, and then can max out a Roth IRA at TDA, invested in cheap index funds or etfs thereof.


Please update what works for you!

Anette

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Re: IRA investments from abroad, need help
« Reply #2 on: September 21, 2017, 02:43:13 PM »
Thanks you for your help.
We will look at TD Ameritrade to find out whether that is a possibility.
As my husband is locally employed ( versus a direct hire from the States) he is not eligible for a TSP nor is a FEIE an option.
Could you please explain which federal tax credit you are referring to?

farfromfire

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Re: IRA investments from abroad, need help
« Reply #3 on: September 22, 2017, 12:10:56 AM »
Thanks you for your help.
We will look at TD Ameritrade to find out whether that is a possibility.
As my husband is locally employed ( versus a direct hire from the States) he is not eligible for a TSP nor is a FEIE an option.
Could you please explain which federal tax credit you are referring to?
I don't know why I wrote that, I meant foreign tax credit.

Assuming he files 'married filing separately', earns X euros and pays Y euros in income tax (not including pension/health/etc.). If Y is more than he would've paid making the same money in the US, which is likely, he tells the IRS that he earned X and therefore owes them Z euros of income tax, but already paid Germany Y. Since Z < Y, he doesn't owe the US anything. Nonetheless, he can still put money in a Roth IRA since he earned money as far as the IRS is concerned.

This is assuming he has no additional US income, if he does it is slightly more complicated. I think, but am not certain, that this is also an option if you file jointly which you are entitled to despite being a Non-Resident Alien yourself.

Anette

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Re: IRA investments from abroad, need help
« Reply #4 on: September 24, 2017, 03:52:40 PM »
The foreign earned income tax credit or exemption is not applicable in this case because the income comes from the US Government.

We will look into the Ameritrade option next.