# Does a U.S. Roth IRA Ever Make Sense for a Non-Resident Alien?



## BBCWatcher

The subject line pretty much says it all. I'm trying to figure out whether it makes sense for a non-resident alien to make contributions to a U.S. Roth IRA. The concern is the 30% withholding tax and how that is applied. Two questions:

1. Is the 30% withholding tax applied within the IRA, i.e. if/when trading activities occur within the IRA (but without withdrawals)?

2. Does the 30% withholding tax apply to an otherwise non-taxable IRA rollover?

3. Is the 30% withholding tax fully recoverable by filing a tax return when there's a qualified withdrawal from a Roth IRA?

Anybody have a good reference where I can read up on the subject of IRAs and non-resident aliens?

Thanks.


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## BBCWatcher

I'm bumping this thread to see if anyone knows how this works. Thanks.


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## Bevdeforges

I wonder if there are many NRAs out there with Roth IRAs. As far as I can tell, you need to be a US taxpayer and have US taxable income in order to open one - which would normally only be the case for an NRA married to a US citizen where they elected to file jointly and forego the FEIE. 

But you might want to check with one of the investment groups (like Fidelity or Vanguard) to see what they say about either opening a Roth or making withdrawals from one for an NRA. 
Cheers,
Bev


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## BBCWatcher

Agreed, it's not a common taxpayer profile, but we fit that particular profile. We're joint filers, we have earned income, and enough of that earned income is above the FEIE. (Joint filers with earned income living in a comparatively high tax jurisdiction who don't take the FEIE would also be good candidates.)

I'm tentatively concluding that it does make sense for a nonresident alien spouse who qualifies to have his/her own U.S. IRA. There is the 30% withholding of gains upon withdrawal, but if (for example) it's a qualified withdrawal from a Roth IRA then every dollar of withholding is refunded (either with a future joint return or a 1040NR). Also, the tax treaties the U.S. signs seem to protect IRAs by and large. It's hard to beat a U.S. tax free retirement savings account which is also tax free in many other countries, so we might as well take the deal.

I put in some inquiries with U.S. brokers to see what they say. I suspect it's not a question they get every day.


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## mroegg

I would love to know what happened with this. I'm having a hard time even opening an IRA for my NRA spouse.


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