Thanks for your question. My name is XXXXX XXXXX X will be happy to assist you today
ok great ! hi megan
Yes, you can have a traditional IRA and contribute to it. You can contribute the same amount as any US citizen - $5,500 per year
$6,500 if you are over age 50
You can read about contribution limits, HERE
I can only put $5,500 toward my retirement per year ?
Yes, that is correct ... unfortunately that is the limit
Are there are any ramifications with paying my taxes and also if I leave to go back to Canada in 3 years what happens then with my IRA ?
If you leave, you still have your IRA and can still draw from it once you retire. If you cash it out you will be penalized 10% if you are under 59.5. The contribution is tax deductible, but I do not know how the Canadian tax side would work for you.
ok well I was wanting to start by putting $25,000 away for my retirement, and adding $4000 I guess that is not possible ?
No, it is not. You can do this in a traditional savings account, but not an IRA
haha ok I've never done this before I guess I was way off in my thinking, how do people end up with say $300,000in their retirement if they can only add $5500 per year ?
They use other retirement accounts that their employers have. You can put back more in a 401(k)
But your employer would have to offer that to you
i see ok , I think my employer offers 401k so in that I can put away $25,000 ?
You can't just contribute a $25,000 lump sum...you can only contribute through payroll deduction
And that limit is $17,500
ah i see 17,500 per year ?
Yes, and then you could on top of that do $5,500 in the IRA
So you're almost to $25,000 there
ok because I have $4000 each month left over that I wanted to put away somehow each month for my retirement
I don't see why you couldn't just do that in a brokerage account, and tell yourself it's for retirement
If you can't save enough in a retirement accoun t
what is a brokerage account exactly ?
It's just an account at a financial institution
Like Charles Schwab, Fidelity, etc
does it allows me to make investments and generate good interest rates ?
Yes, it would
so is that better than an IRA ?
In your situation, I would say yes. There's no penalties if you cash out and you can easily take the funds back to Canada. If you get an IRA and then move back and want your money and are under 59.5, they tax an additional 10%
ok thanks i'll look into a brokerage account
Glad I could help
Do you need any additional information?
If not, please rate me positively using the rating feature along the bottom of your screen
no i think thats good
Thanks so much!
Please don't forget to rate before leaving the chat