Foreign National and Roth IRAs
Three questions regarding foreign nationals and Roth IRAs:
1. If an individual is a foreign national that has earned income in the US, can they open and contribute to a Roth IRA (assuming they fall within the income eligibility limits)?
2. If they can, and they have the earned income to warrant a spousal contribution, can the foreign national with earned income make a Roth IRA contribution for a non-working spouse?
3. If the foreign national is able to have the Roth IRA, can they make a distribution from the Roth under the first time homebuyer exception…assuming that the home is in the US? What if the spouse owns rental property in the US, would that affect the ability to claim the first time homebuyer exception to the 10% penalty?
As always, thank you for your insight!
Permalink Submitted by Marvin Rotenberg on Wed, 2010-02-17 18:18
They can contribute to a Roth IRA so long as they have US earned income and a tax ID number. They will of course be governed by phase out limits for contributions. Yes they can contribute for a non-working spouse. The same rule apply that apply to traditional IRAs. The maximum contribution limit for 2010 is $5,00 plus $1,000 if age 50 or older.
The contribution for the non-compensated spouse is based on the spousal IRA rules. As such, the contribution for such spouse is the lesser of:
the annual IRA contribution limit, or
the combined compensation of both spouses, reduced by the actual IRA( traditional & or Roth IRA) contribution of the higher compensated spouse.
Marvin