| Retirement saving suggestion for non-US citizens |
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pd_2004
New Member
Cash: $ 0.65
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Joined: 31 Jan 2010
Location: NY
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| Retirement saving suggestion for non-US citizens |
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Hi,
I am new to this forum. I am also a novice to financial planning and retirement. I am not a US citizen. I am not sure how long I would be here in the US. Given that what mode of investment would you recommend for me for purpose of saving for retirement? The IRAs have penalty associated with them on withdrawal, correct? So I do not know if that is the correct way for me because of the uncertainty on when I have to leave US. I am just beginning on saving for retirement and would appreciate suggestions from experts. Thanks.
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Sun Jan 31, 2010 11:07 pm |
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coaster
Senior Advisor
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Location: Wisconsin
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Just invest in a good portfolio of mutual funds.
~Tim~
Eye Candy : Why Whimsy
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Mon Feb 01, 2010 3:31 am |
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pd_2004
New Member
Cash: $ 0.65
Posts: 3
Joined: 31 Jan 2010
Location: NY
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Thanks. Are these portfolio of mutual funds available outside of an IRA?
If so, which of the following would be a better route?
1. Invest in mutual funds outside of IRA . I assume this is taxable each year? So I pay tax each year, and then at the end when I leave, just close the account and withdraw the amount.
2. Open an after-tax IRA (Roth, I presume) and then let it grow tax-free and then pay tax and penalty on withdrawal whenever that might be (a year or may be 3 years)
Both of these come with a risk of losing the principal also, isnt it? In the end, which one would be of less of a loss overall? Even if we assume the principal is gotten back, does option 2 negate the effect of tax-free growth because of the penalty? In other words, is it even worth it to have it in one of the options above, or just have it in savings account in which case the principal atleast remains there guaranteed plus some non-significant interest.
What type of time horizon would be the cut-off point in making the decision to go with one of the above options?
Thanks
Last edited by pd_2004 on Wed Feb 03, 2010 11:02 pm; edited 1 time in total |
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Mon Feb 01, 2010 10:49 pm |
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coaster
Senior Advisor
Cash: $ 1318.80
Posts: 6496
Joined: 11 Oct 2005
Location: Wisconsin
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An IRA is just a box to wrap the presents in. You can buy the presents without needing to put them in the box. 
An IRA makes no sense for someone who's not paying US income taxes. The traditional IRA addresses taxes paid now, and the Roth IRA addresses taxes paid upon distribution.
Just google "mutual fund" and I'm sure your computer will be overloaded with information. 
~Tim~
Eye Candy : Why Whimsy
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Tue Feb 02, 2010 5:58 am |
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pd_2004
New Member
Cash: $ 0.65
Posts: 3
Joined: 31 Jan 2010
Location: NY
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Thanks.
Looks like I may have misled you. I do pay federal and state taxes in the US every year. So far all I had was just savings account. Recently I had a baby and that has changed my thinking into trying to save more, although now it is difficult with added expense. So that is why I was trying to figure out the best mode of investment. The question comes up mainly because I will probably return back to my home country. So I was thinking on how should I save until that point so that it is tax-advantaged, if possible and ends up less of a loss at the end (due to penalty, taxes etc.). Looks like there is no "correct" answer.
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Wed Feb 03, 2010 11:02 pm |
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coaster
Senior Advisor
Cash: $ 1318.80
Posts: 6496
Joined: 11 Oct 2005
Location: Wisconsin
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If you're sure you won't be subject to US income taxes after retirement, then the Traditional IRA and 401(k) vehicles are the obvious choices because they're tax-advantanged now. Naturally you'd have to plan on keeping the account until retirement because the asset manager will automatically take out the tax and penalties according to US tax rules regardless of where you live if you take them out early.
~Tim~
Eye Candy : Why Whimsy
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Thu Feb 04, 2010 3:27 pm |
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