Investing ROTH IRA/401k DACA recipient
 

Hi everyone. Long time lurker.

I just got recently approved for the renewal of my DACA. I'm currently 22 years old, part-time college student and working full time.

I want to make the right financial decisions now and open a Roth IRA account. Are we legallly allowed to do that? I remember reading that the person had to be a citizen but then I read posts from a year ago here from people that opened Roth's and are DACA recipients.

I plan to open an account with Vanguard.Are we legal residents for this purposes just like we are when doing our taxes?

Also, my employer offers a 401k with a good company match.Am I able to open this as well with my status?


Thanks for your help

Re: Investing ROTH IRA/401k DACA recipient
 

Yes you can! There are several peoe here who have investment accounts. I believe you will have to send a copy of your EAD and social if they ask for it but other than that you're good to go.

Re: Investing ROTH IRA/401k DACA recipient
 

You can. You should max out the 401k and get full benefit of your company matching. I think there are better options than Vanguard--Charles Schwab, for example, offers more no commission investment funds than Vanguard, and you can still buy Vanguard funds through Charles Schwab. Fidelity and Merrill Edge are also good options. If you will be an active trader, check out Etrade.

Re: Investing ROTH IRA/401k DACA recipient
 

You definitely can open a Roth IRA, 401k and taxable account. I have all three and there were no problems whatsoever when opening them. Just a couple of points:

1. I was never asked to send my EAD or provide anything but my SSN

2. A good rule of thumb for investing is:
a) 401k till company match (its a 100% or 50%return!)
b) Max out roth ira
c) HSA or 401k depending on the situation.

3. Vanguard is good as it gets for low cost. They have every fund that any regular investor would need. Schwab and fidelity will do just fine as well.

4. Unless you want to be an active trader (which I would strongly suggest you NOT do) pick an asset allocation that matches your risk level and ride the market during the good and bad.

Re: Investing ROTH IRA/401k DACA recipient
 

Awesome thanks for the response guys! I have only checked out Vanguard,T Rowe Price and TIAA Cref . I will make sure I check the ones mentioned as well. Just to confirm,under citizenship I can click the resident alien option,correct? and then put the country I was born when they ask for country of citizenship. better safe than sorry :D

Re: Investing ROTH IRA/401k DACA recipient
 

Also, forgot to add this. I'm planning to open and fund my Roth IRA fully($5,500) with the money from my return for my 2014 taxes which I should be receiving next week and some money I have saved for that purpose. If I open it and fund it before April 15th,2015 of this year. Does it go towards 2015 or 2014 ROth ? I noticed that people can fund their Roth IRA's for 2014 until April 15th,2015. How does that work? I'm gonna assume that it would go for 2015 since it was opened this year. But if I was able to claim that for 2014 taxes I could just amend them after?.
How will that work with taxes next year since I can contribute by April 15th do I have to ammend my taxes. I plan to do my taxes next year asap and not wait like I did this year. Sorry for all the questions

Re: Investing ROTH IRA/401k DACA recipient
 

Great questions!

1. You can fully fund your roth ira for 2014 (up until April 15th) and 2015 right now.

2. Using Vanguard open an roth IRA account and when making contributions it will prompt you for which year you are contributing. It will let you know if you can contribute and if your trying to go over the limit. I'm assuming other places will have something similar.

3. Thus you could put $11,000 tomorrow for both years combined.

4. Roth ira will NOT affect your taxes in any way. Since roth is on an after tax basis there are no tax implications (there are exceptions but it does not relate to what you are asking). It is useful because in retirement all withdrawals are tax free. Also you can withdraw contributions (but not gains) at any time. So if in a couple months you are in a bind you can withdraw the full 5,500 with no penalty. However, the market may be down at that time so it should be thought as retirement only.

5. A traditional IRA is on a pre-tax basis. That affects your taxes and is a different conversation altogether.

Re: Investing ROTH IRA/401k DACA recipient
 

Or.. for really simple investments try out Betterment.
Betterment.com or download the app to your smartphone.
I'm personally using it myself at the time.