Author Topic: Vanguard resident status  (Read 5342 times)

Sabby

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Vanguard resident status
« on: August 21, 2015, 05:34:32 PM »
I'm on H1B visa, early on my MMM journey (assuming I can get a PR in the near future). 401K through my employer, enabled me to open other investment accounts with Fidelity.

Called Vanguard just now to open a brokerage account, and this is after I tried to apply online. From the online system, I gathered that I was a "non-resident alien", simply because i'm neither a US citizen nor a GC holder. Subsequent to this, the agent told me "Sir, this is a recorded conversation....,... as a non-resident alien, we can open a brokerage account, but you would've access to only Vanguard funds.." fine no worries, this is exactly what i want!; "but you cannot open a retirement account with us". Darn!! No IRAs, not for me or the wife.

Whose definition should i consider for the "residency test"? USCIS (which is the US citizenship/green card) or IRS (for which i file taxes as a resident alien)? Any similar experiences out there?

I do see that this discussion came up before , more than an 1-1/2 years ago, here http://forum.mrmoneymustache.com/investor-alley/vanguard-alternatives-non-us-citizensgreen-card-holders/. I want to do the right thing, but getting ambiguous information, and hope somebody here might be able to guide the likes of me.

I was left shaken by the heavy handed approach of the agent, and hence this post. TIA.


Cathy

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Re: Vanguard resident status
« Reply #1 on: August 21, 2015, 05:51:41 PM »
What you are dealing with here is a poorly-defined and inconsistently-enforced Vanguard policy, not a restriction mandated by either tax law or immigration law.

You'll probably want to find a broker-dealer that does not discriminate against persons who are not US citizens. I recommend Interactive Brokers.

When you do find a better broker-dealer, they will ask you for your residency status under the Internal Revenue Code because that is relevant to the broker-dealer's obligations under the law. In particular, the broker-dealer generally must withhold a portion of dividends paid to a nonresident alien, although there are various exceptions. 26 USC 1441.
« Last Edit: December 30, 2015, 11:42:57 AM by Cathy »

Sabby

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Re: Vanguard resident status
« Reply #2 on: August 21, 2015, 09:25:32 PM »
Thanks Cathy! I didn't catch that thread. Good read. See similar experiences on other sites too.
Like Nanu in that thread, think I'll stick with Fidelity for now, and "roll over" to Vanguard at some point in the future.

kodokan

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Re: Vanguard resident status
« Reply #3 on: August 22, 2015, 09:35:04 PM »
It's the IRS one. Vanguard doesn't give two hoots about your visa status, it's your tax residency they're interested in. As a H1-B visa holder, you're presumably a US resident for tax purposes - been here long enough, met Substantial Presence, got a SSN, file a US tax return, etc? If so, you're absolutely good to go.

(From a former L2 visa holder with a Vanguard account :) )

MidWestLove

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Re: Vanguard resident status
« Reply #4 on: August 23, 2015, 05:01:40 PM »
Sabby, when you get a chance - read up on 'dual-intent' visas like H1B for immigration purposes. meaning that you have an option (but not a requirement) of resident treatment. as for your original question, you created it by answering wrongly as non-resident for tax purposes, you are , have social security withheld from you, pass substantial presence test ,etc.  I had no problem opening account (with Fidelity) as H1B historically...

Paul der Krake

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Re: Vanguard resident status
« Reply #5 on: August 23, 2015, 06:08:33 PM »
Uh, they still haven't bothered to clarify this nonsense. I wonder how many frugal, highly paid foreign workers they are missing on as customers because of this.