aesphete

Hello all!

So, I've been trying to figure out what to do with my retirement planning. I'm turning 30 in a few months, so I've come to the realization I should do something about it properly!

I paid into a pension from back when I worked in the UK for a few years post-Uni. I've been in the US for a little over a year, and I'm currently maxing out (to the full $17.5k limit) my company's 401k. Oh, and I'm doing the voluntary UK State Pension contribution thing.

I'm unsure as to what my long term plans are, although I'd say that I intend to spend at least the next 5 years over here before moving back to somewhere in Europe (providing it hasn't imploded by then!) to 'settle down' properly. I doubt I'll end up being in the US for my retirement, though.

My company has recently started offering a Roth 401k, which got me thinking about future tax implications. My understanding is that if I were to leave the US, I should roll my 401k into a Roth IRA before departing to minimize tax hassles upon returning to the UK (I don't intend on withdrawing until I'm older that 59.5). Would contributing to a Roth 401k mean I could avoid this rollover step?

I also plan on maxing out a Roth IRA, with the intent of investing in UK-based funds held in Sterling to minimize currency risk.

Does a combo of Roth 401k and Roth IRA with an appropriately balanced portfolio make the most sense for someone who's in the US for the medium term? I've searched a fair amount and can't seem to find any solid recommendations as to what someone in my position should be doing - I wouldn't have thought that a general retirement strategy would be too hard to define.

update: I'm not yet a Green Card holder, I'm here on a H-1B. My company is looking into sponsoring me though, so that may be worth considering!

MarylandNed

I doubt that this is the best place for such advice. Why not consult with a financial adviser?

aesphete

Generally I've steered away from using financial advisors in the past and preferred to educate myself to make my decisions. If anyone can recommend a decent, fee-only advisor with relevant knowledge and experience of my position who won't rip me off, then I'd be interested in hearing what they have to say.

nun

You're doing all the right things by saving the max for retirement comparatively early, and well done re the Class 2 NICs.

Whether you do the ROTH 401k or the 401k depends on your current tax rate and the income tax rate you think you'll pay when you take money out. Generally if you think you'll pay lower tax in retirement the regular 401k would be better, but in your situation I might do the ROTH 401k as you plan to leave the US in the near future.

If you leave your current employer it's usually a good idea to roll any 401k over into an IRA as you can get lower fees and more fund choices that way.

Finally make sure you are dealing with your UK pension correctly on your US tax return, FBAR, 8938 and know about the treaty exemption on annual gains.