401k / Roth IRA for foreigners?
by drftr » Fri Feb 28, 2014 3:14 am
Hi,
I wondered if tax deferred accounts are available to non-American non-US citizens. I'm from The Netherlands and have my money mostly invested in the US. I hope there's some benefits to be had from 401(k) / Roth IRAs but this may only be available for American tax payers. Just in case these ARE available, would benefits be the same for Americans and non-Americans?
Background info: I mostly invest in dividend paying equities through TD Ameritrade just to get income. This means that I buy stocks and don't plan to sell them within the next few decades if at all. I just want to live of the hopefully ever growing dividend payments. So I can imagine holding the equities in a tax deferred account and have regular dividend payments straight into my US bank account. But I'm not sure if the world works this way...
Any advice/insight is highly appreciated!
drftr
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Re: 401k / Roth IRA for foreigners?
by dgdevil » Fri Feb 28, 2014 8:53 am
The world is not spinning in your favor, alas. 401(k) is provided by an employer, and IRA eligibility is determined by earned income, which does not include dividends.
http://www.irs.gov/Retirement-Plans/Pla ... nt-Plans-1
USA and NL have a tax treaty, so at least you're not paying excessive tax.
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Re: 401k / Roth IRA for foreigners?
by an_asker » Fri Feb 28, 2014 10:27 am
drftr:
Where do you live and work - USA or Netherlands? I am asking because I was unaware that folks living in a different country can have accounts in the USA and play the USA stock market like 'natives'
I guess you always learn something new (if you make the effort!)!
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Re: 401k / Roth IRA for foreigners?
by drftr » Sat Mar 01, 2014 3:29 am
I'm a Dutch citizen. However, since I'm travelling this wonderful planet continuously there's not much of a link with good old Holland except for paying taxes and doing a project every couple of years. For this reason I thought moving my banking business to the US where I do my investments through TD Ameritrade (and TreasuryDirect once 30 year bond rates move to 5% or so).
Since I plan to redesign my investment portfolio more or less like Harry Browne's Permanent Portfolio (but with short term sovereign bonds and/or CDs from emerging markets, held in local currencies in local accounts) I thought it would make sense to see how I can maximize gains when applying tax rules - both in the US and in The Netherlands. It would be a pity to find out that I should have done things differently AFTER building the new portfolio, wouldn't it? For this reason I'm trying to find out whether it's good / not so good / bad to open bank accounts in the US - tax sheltered or not. So any help / advice is more than welcome!
drftr
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Re: 401k / Roth IRA for foreigners?
by Karamatsu » Sat Mar 01, 2014 5:56 am
I don't think you would be able to open an IRA account in your situation. For that matter, you probably won't be able to open a Treasury Direct account, either. My impression is that both require an actual US social security number (not an ITIN).
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Re: 401k / Roth IRA for foreigners?
by travltoo » Sat Mar 01, 2014 10:51 am
The link below discusses the advantages / disadvantages of foreign nationals participating in 401k plans
http://www.us.kpmg.com/microsite/tax/ies/tea/spring2006/article4.asp
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