elifflower

Hi Expat friends,

If being in quarantine has given me one thing, it's been an awakening to my personal finances.
Aged 32, I've never prioritized or even payed much attention to saving for retirement, mostly in part because before I moved to the U.S from London (3 years ago), I didn't feel like I was making enough money to make more than a pitiful contribution.
Fast forward to now, I've devoured many a youtube video and am almost done with <<<snip>>> (..any other personal finance/investing book reccos btw?).

I'd like to open a ROTH IRA account, ideally with Vanguard to invest in one of their low expense ratio Index Funds. I notice many users on here have accounts with Vanguard, however I've just tried to open the acc, and it asks for my citizenship. There are 3 options - U.S Citizen, Resident Alien and Non-resident Alien. I am here on an O1 Visa so naturally I selected Non-Resident Alien, but an error message popped up:

"Nonresident alien status

Due to your nonresident alien status, you can't open an account online. Please contact us if you have questions."

I've tried to research this online and see others have struggled with this and after they have spoken to Vanguard on the phone have been rejected (I haven't tried to call myself yet). Others say once we pass the 'substantial presence test' the IRS describes you as a "US resident alien" for tax purposes, so I could tick 'Resident alien' on this Vanguard application form. Is this what other expats have done, and is this in any way harmful/a lie? If I were to do this, could I still select United Kingdom as my Country of Citizenship, the next question?

Next on my list is sorting out voluntary Class II NI contributions..

ecpb1992

You are classed as a resident alien if you are located in the US for the majority of the tax year. It has no bearing on your visa type as long as you have a valid visa and O1 is one of them (ie.not an ESTA). For tax purposes, you will be classed by the IRS as resident alien after x amount of days in the country and thus be required to pay tax.

I work in Real Estate and this comes up often regarding FIRPTA and other tax status’.

It’s confusing terminology between ‘resident alien’ and ‘permanent legal resident’ - the two terms that are thrown around a lot, but they are completely different things.

ecpb1992

Yes you can still be a citizen of U.K.

tht

Visa type is actually important as there are exempt individuals, and visitor visa / ESTA is not one of them:
https://www.irs.gov/individuals/inte...-presence-test

I assume the term you were looking for was:
Lawful permanent residents (LPRs):
https://www.dhs.gov/immigration-stat...nent-residents

ecpb1992

Thanks. I wish I’d have had the energy to post the link to the IRS/DHS when originally posting a reply at midnight last night, to correct a couple of specific things I mentioned regarding LPR & the visa status/type. The point still remains the same however OP - pass the substantial presence test with your O1 visa and you would qualify for resident alien status. You can still be a citizen of U.K. on the next question. Hope
this helped you.

mrken30

You may also be asked if you are subject to FATCA, that is a completely different ball game. Also some people have had issues with managing 401k when they return to the UK. Just something to be aware of. Some institutions are more friendly to foreigners than others.