I received an email from a reader about my earlier post about withdrawals from 401(k) accounts for non-citizens. I mentioned there that if a non-citizen leaves America, he/she should be able to roll over his/her 401(k) balance to an IRA. It turns out that things may be more complicated than that.
This is what I found out about IRAs for non-citizens at leading IRA providers. Since I am a customer of both Vanguard and Fidelity, I just sent emails to their customer service. For others, I have summarized what I found at their websites.
From Vanguard's email response:
Only foreign investors who have permanent residence in the United States and are not considered a nonresident alien (NRA) are able to invest in Vanguard funds.Now, I opened an IRA with Vanguard back when I was a non-resident alien, so this response puzzled me. I checked their electronic application form, and sure enough, it allows "US citizens, Resident aliens, and Nonresident aliens" to apply. I think their customer service may be a little behind the times.
Fidelity's response was much clearer. They have no problems with non-resident aliens opening IRAs. Regarding distributions, this is what they had to say:
When a non-resident alien takes a distribution from a Fidelity Roth or Traditional IRA account, we will withhold foreign taxes in accordance with the treaty between the US and the country of residence. The highest rate of withholding for foreign taxes is 30%.This response seems correct, except that it is not "foreign taxes" but federal taxes that are withheld.
T.Rowe Price's application form allows only "US Citizens and US Resident Aliens" to apply. I guess they have no problems if a US Resident Alien who opens an IRA then leaves the country and stops being a Resident Alien.
TD Ameritrade's online application form allows non-resident aliens to apply as long as they specify their "visa type".
E*Trade allows "US residents with a Social Security Number" to open an IRA. This seems to follow IRS's definition of a US resident, so I guess most non-citizens will qualify.
If anybody has additional information about these IRA providers, or about any others, please let me know. I will add the information to this page.
- IRS publication 515: Withholding of Tax on Nonresident Aliens and Foreign Entities. This IRS publication provides details on tax treaties and tax withholding.