Savings and Roth IRA Account Question

[sameer77]

Hello All,

I'm here on a H1B visa. For the last few months, I've been thinking about opening a Roth IRA account. I had following questions.

1. Can a H1B holder open a Roth IRA account and have that money invested in mutual funds or stocks? I'm thinking about doing this because my company does not offer 401K or other retirement benefits.

2. I've read again and again, investment should be passive. Can this type of investment (Roth IRA) where I will be putting $ 250/month for my retirement purposes considered a passive investment.

3. Also, I've opened a savings account. What are tax implications on that. I was told by the bank that I do not pay any taxes on the interest on my savings account if I make $10 or less on interests. I pay taxes only when I make more than $10. I opened this account last year but did not report the interest as it was barely $1. Is the bank correct?

4. Also can H1B holder open a brokerage account and trade stocks on a monthly or weekly basis? I'm not thinking about doing this. But I'm just curious. Is this legally allowed?

Many thanks.

[nkm-oct23]

Originally Posted by sameer77

Hello All,

I'm here on a H1B visa. For the last few months, I've been thinking about opening a Roth IRA account. I had following questions.

1. Can a H1B holder open a Roth IRA account and have that money invested in mutual funds or stocks? I'm thinking about doing this because my company does not offer 401K or other retirement benefits.

2. I've read again and again, investment should be passive. Can this type of investment (Roth IRA) where I will be putting $ 250/month for my retirement purposes considered a passive investment.

3. Also, I've opened a savings account. What are tax implications on that. I was told by the bank that I do not pay any taxes on the interest on my savings account if I make $10 or less on interests. I pay taxes only when I make more than $10. I opened this account last year but did not report the interest as it was barely $1. Is the bank correct?

4. Also can H1B holder open a brokerage account and trade stocks on a monthly or weekly basis? I'm not thinking about doing this. But I'm just curious. Is this legally allowed?

Many thanks.

1 and 2. Any investment in stocks, mutual funds is considered passive. YOu are absolutely OK making these investments.
3. You will have to report all interests. Banks usually don't report taxable income if it is less than $10. Probably the cost of generating 1099 is not worth the tax.
4. Yes, it is absolutely allowed.

[sameer77]

Guys,
Thanks for your advice and suggestions.

[vviti]

I am wondering what will happen to my IRA account when/if I move out of the country. I read on an old post that the IRS will deduct 10% plus 10% penalty for early withdrawal for a regular IRA, no matter where you are, or of your income (in that case they were talking about India). However, how would that work with a Roth IRA? since I have already payed income taxes on a Roth IRA, if i move to another country and the IRS is still subtracting 20% independently of my income, it seems as if it'd be more convenient to open up a traditional IRA account.