Roth IRA

[audelair]

My wife came in on a CR-1 and is a conditional permanent resident with a social security card. She arrived January 2006.

 

I plan on filing her with me as a non-resident wife (as an exemption) for my 2005 tax filing.

 

I'm wondering, can I go as far as opening up a Roth IRA retirement account for 2005 (we have up until mid-April) to contribute to Roth IRA's. Is there any legal/tax complications to doing this?

 

If not, is there any reason why there would be any complications getting started on her retirement for the 2006 tax year?

 

Thanks for any advice!

[yuehan123]

Curious that no one answered you.

 

I have the same question regarding IRAs. The answer is: Seek competent, professional Tax advice.

 

So, I called the IRS. The person I spoke with, I.D.#:7515776, stated: "Election as a resident alien makes no difference. Status is not relevant to meet the IRA contribution requirements." "However, you must meet all the other criteria. For example, you must have taxable, earned income including wages and alimony at least as great as the amount you want to contribute."

 

Further, I found this IRA web site: Publication 590 (2005), Individual Retirement Arrangements (IRAs) http://www.irs.gov/publications/p590/ch01.html#d0e6459

 

"To choose exemption from withholding, you must certify to the payer under penalties of perjury that you are not a U.S. citizen, a resident alien of the United States, or a tax-avoidance expatriate.

Even if this election is made, the payer must withhold tax at the rates prescribed for nonresident aliens."

The discussion is in relation to witholding on distributions from your IRA. Both nonresident and alien residents are mentioned.

 

This only my personal opinion. My resident (for tax purposes) spouse is eligible for an IRA.

[Stone]

Yuehan123, I think the original post was referring to a Roth IRA, and you are talking about a Traditional IRA here. BUT your post did bring up a very interesting point here.

 

If the U.S. citizen or resident is living outside of the U.S. territory, he or she can have the Traditional IRA payer withhold proper amount of taxes at the time of distributions, but he or she can get the money back (refund) from IRS when the owner of the traditional IRA account files his/her tax returns, provided the IRA owner falls into a low tax bracket at the time of distributions (usually at retirement age). Am I right on this?

 

BTW, does Yuehan mean "John" in Chinese?

[yuehan123]

Yuehan123, I think the original post was referring to a Roth IRA, and you are talking about a Traditional IRA here. 

 

Am I right on this?

 

BTW, does Yuehan mean "John" in Chinese?   

193371[/snapback]

I felt my reply was already long enough so I left out the part I read on the IRS web site about Roth IRAs follow the rules for a Traditional IRA... I read lots of stuff there I chose not to put here.

 

I have no idea about getting witholding back. I won't be in that position for a couple years, anyway.

 

Yes. My Chinese name, Yuehan, was given to me by the teacher in my first conversational Chinese class. I was told it means John.

[audelair]

Excellent. Thank you very much. The IRS response was simple and sweet, and it pretty much answers my questions. I was just worried there was more complex rules that I didn't know about.

[yuehan123]

Better to add this now. Sometimes the answers given on the IRS phone line prove to be wrong later.