[vannavada]

I'm an Indian Citizen working as a consultant here in US and my current employer does not offer any 401(k) plans or other options.

Is there a way I can open a IRA account ( say with ETrade or ShareBuilder) without any issues from my employer's side/ or his knowledge?

Are there any more complications to it when filing taxes every year? Or complications regarding immigration rules/status?

What if I change my employer/companies?

Can I close this IRA account anytime and get back all the money in it (probably earnings from bonds and stocks included) or do I have to wait until I reach 70 years?( I'm 24yr now)?

Thanks in advance for your concern and guidance.

Regards,

-envy.

[AtlantaTaxExpert]

-Envy:

You may open an IRA (Roth or traditional) with absolutely NO employer input, as long as your income qualifies you (Roth has a $150K ceiling).

Because the Roth IRA is funded with after-tax money, after five years, you can access it anytime you want with virtually no penalties.

The traditional IRA is a different story! It has all kinds of restrictions and a 10% Early Withdrawal Penalty that is real punitive in nature. Withdrawing at age 59.5 is basically the BEST way to handle a traditional IRA.

[vannavada]

Thanks a lot for the fast and apt response Atlanta Tax Expert!

But, when you say Roth IRA is funded by money after taxes and a ceiling of 150K(should I be making more than that in a financial year?) and traditional IRA is pre-tax..

Do you mean, Traditional IRA account is funded from money before my employer sends out a pay stub?

How will I be able to fund this traditional IRA account with out asking my employer to put money from my pay into this account before applying taxes and sending me a pay stub for each pay period?

Is it possible to open both accounts?

So that if I need to take out money for say AUTO/HOME loan after 5 years, I can take from the Roth IRA(how much fee/tax will I be paying,if I have 20,000 after 5 years , as I think 4000 is the limit on yearly deposit to a ROTH IRA, and would like to withdraw all of that)
And be left with 20000 in the IRA which I wouldn't be touching until I turn 60?

I'm really novice in these matters and would appreciate your patience!

Thanks a lot!

-envy

-Envy:

You may open an IRA (Roth or traditional) with absolutely NO employer input, as long as your income qualifies you (Roth has a $150K ceiling).

Because the Roth IRA is funded with after-tax money, after five years, you can access it anytime you want with virtually no penalties.

The traditional IRA is a different story! It has all kinds of restrictions and a 10% Early Withdrawal Penalty that is real punitive in nature. Withdrawing at age 59.5 is basically the BEST way to handle a traditional IRA.

[AtlantaTaxExpert]

-Envy:

Pre-tax money means you can deduct the contribution to a traditional IRA on your federal tax return as an adjustment to income, up to $5,000 per year.

After-tax money means you CANNOT deduct the contribution to a Roth IRA, but the Roth IRA grows tax-free (where a traditional IRA grows tax-deferred). Further, I was not clear on the income limit, which is $160,000 for a person filing jointly with spouse, or $110,000 for someone who is single.

After five years, you can basically withdraw whatever you want from the Roth IRA with ZERO tax consequences. With a traditional IRA, any withdrawal is taxed (both BOTH the IRS and the state in which your reside if that state has an income tax) PLUS there is that 10% Early Withdrawal Penalty.

The amount that can be contributed each year is $5,000 MAX. You can open BOTH types of IRA, but the total funding limit is $5,000 for the combined accounts.

The employer IS NOT INVOLVED with either a traditional or Roth IRA. You set up and fund the accounts all by yourself!

Contact me at if you want further details. If you want to discuss it over the phone, e-mail me your phone number.

[cuadradog]

I tried to open a roth ira account in Vanguard, and they ask about the status, options "citizen, resident alien, non resident alien". I understand that H1b is a non resident alien; and they answer that Roth Ira is not available for non residents. Is this specific to Vanguard? Or H1b is a resident alien?
Thank you

[AtlantaTaxExpert]

If you will be under the H-1B visa for more than one year, you will be considered a resident alien once you meet the 183-day Substantial Presence Test.