Hi guys, I am juggling between maxing my Roth or just stick with the taxable brokerage. For context, I am an international worker currently working in the US on a visa that is good for 2 more years. The next step to extend the visa is a lottery system which is really uncertain.
I am wondering if it makes sense for me to try and max my Roth for the years I have in the States or not. Thank you!
Does Roth IRA make sense for an international worker?
byu/AbroadAmbitious9372 ininvesting
Posted by AbroadAmbitious9372
5 Comments
My question would be how does taxation work if you are not in the USA when you take distributions. I can’t imagine all countries follow the USA practice of not taxing Roth distributions.
Roth IRA, even if your country ends up not supporting a Roth IRA’s tax benefits — the worst I could imagine happen is that your home country would treat your Roth IRA as equal to a brokerage.
So essentially a Roth IRA only has upside potential, and worst downside would be it being downgraded to the equivalent tax treatment of a brokerage.
Best case scenario: Benefits of Roth IRA.
Worst case scenario: Roth IRA is treated as brokerage equivalent
I’m not a tax expert, but this would seem to be fairly intuitive in terms of expected future tax treatment of your Roth IRA. As you are essentially going to have taxable gains on already taxed income (if your country doesn’t support Roth IRA treatment), so I can’t foresee your home country treating it any differently than as though your Roth IRA is an equivalent to brokerage taxability (due to a Roth IRA functioning exactly as a brokerage in terms of money going in, and only possibly different on money coming out ‘assuming you have gains’). HOWEVER, if your country supports Roth IRA, than you get to enjoy tax free growth. So Roth IRA seems like best choice if your intending this money for retirement.
You should ask a tax professional if your home country supports Roth IRA treatment — a 5 minute consultation would likely answer this question for you.
Regular IRA. If you don’t stay, just do withdrawals when you are back in CN. If you withdraw less than personal exemption -> no tax
Roth IRA seems like the safer bet here since worst case it just gets treated like a regular brokerage by your home country anyway. No real downside to maxing it while you can. but have you looked into what happens if you leave and then want to withdraw early? curious if the 10% penalty still applies when you’re no longer a US resident
Yea if youve earned US income and might return later since the account stays yours even if you leave but you can’t add once you’re no longer US employed and early withdrawals of earnings trigger taxes and penalties.