Skip to main content
No. of Recommendations: 0
Background: I am 26 and working for the UK subsidiary of a US based consultancy. I am currently contributing to the company's UK retirement scheme and share purchase program, but would like to kick off a US IRA as well.

Question 1: Am I able to open up and contribute to a Roth IRA, given that I only have income earned abroad(UK) in 2001? What if I do not or (or cannot) exclude all of that 2001 foreign earned income on IRS Form 2555? Does that give me the AGI I need to be eligible?


Yes, if you have compensation income not excluded by the foreign earned income exclusion, you are eligible for some form of IRA. If you meet the Modified AGI (MAGI)requirements, you may qualify for a Roth.

Question 2: My income was under the $110K maximum for Roth IRA eligibility in 2001, but may exceed this amount in 2002. What does this mean? Am I better off just going with a Contributory IRA? Or even with index funds not part of a retirement / tax deferred scheme? Does the fact that this is foreign earned income (see above) change the equation (as $76k could be 'excluded')

To determine eligibility for a Roth MAGI is used. Among other things the foreign earned income exclusion is added back to regular AGI. If your MAGI is over $110,000 you do not qualify for a Roth. For AGIs between $95,000 and $110,000 Roth eligibility is phased out. Below $95,000 you are qualified for a full Roth. Whether you would be better off in a traditional IRA or non-retirement index funds depends on present and future tax rates and whther you can just buy and hold or must trade.

Question 3: How much would it cost for a financial advisor to sort this out!!?


I imagine a CPA or CFP in England would charge $80-$160 per hour. Or you could handle it by E-mail.

Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.