Investing in the future for some means investing in stocks, but for others, this means saving for retirement to live a modest, comfortable life. As a non-US citizen, if you’re legally allowed to work and reside in the United States, the Internal Revenue Service will view you as a non-resident alien.
You’ll be required to pay taxes, and you’ll also have retirement options available to you.
Immigrants make up a large portion of some states’ revenues. Chicago’s immigrants earned the state $55 billion in 2014, so immigrants can be big supporters of local economies. These individuals, when working legally in the country, are able to save for their retirement as a non-US citizen.
There are rules in place, but these non-US citizens can invest in:
401(k) Retirement Options
A 401(k) may or may not be offered by an employer, and rules on the minimum years of service may exist. With a 401(k), the annual contribution was $18,500 in 2018 and up to $24,500 for a person who is 50 or older.
IRA Retirement Options
Roth and traditional IRA options are offered, too. You can open up a sole IRA account, or you can have this account in addition to a 401(k). While this isn’t a normal investment option, the account can have contributions of $5,500 – $6,500 depending on the person’s age.
An IRA’s contributions will be put into different investments, include mutual funds, stocks, bonds CDs and other investment vehicles.
As a non-US citizen, you’ll need some form of identification to give to the IRS. Social Security numbers are not going to be an option, so most non-residents will have to apply for an Individual Taxpayer Identification Number (ITIN).
This is a requirement by the government, so if you don’t have a social security number or ITIN, you won’t be able to open a retirement account since all interest, gains and dividends need to be reported to the IRS.
Issues do exist if you plan on going back to your country of origin. There are penalties for withdrawing from your account early: a 10% penalty plus taxes will be assessed. If leaving the country and considering cashing out the funds to put into a retirement account in your country of origin, you may want to reconsider if you’re 59 ½ or under.
Some countries do have tax treaties with the United States, so you should be able to enjoy tax-free retirement account growth in your home country.