With a tight job market and low unemployment, a significant portion of the US “talent gap” is being filled by foreign-born workers with employment visas such as H-1B. These visas allow foreign workers to temporarily live and work in the United States while employed. In practice, however, this may mean that individuals can spend years or decades (or even an entire career) in the United States on a “temporary” visa.
Like native-born workers, foreign workers need to think about retirement savings, planning their kids for college, managing medical expenses, and all sorts of other financial goals. But U.S. programs that encourage Americans to save toward these goals—that is, through tax-advantaged accounts such as 401(k) plans, IRAs, 529 College Savings Plans, and Health Savings Accounts (HSAs)— It may impose hurdles on the public. Foreigners dependent on them for their savings needs.
For example, if a non-U.S.-born worker contributing to a particular account eventually returns to their home country, the tax benefits of the particular account may backfire. For example, a Roth IRA can be taxed once at the time of donation and then grow tax-free in the United States, allowing you to accumulate significant tax-free savings over time. However, some countries do not recognize the tax-free nature of Roth accounts, so later withdrawals from the IRA in another country may be taxed again, negating the main benefits of Roth savings.
Additionally, foreign workers often face hurdles when opening and accessing some accounts as well. For example, some brokerage firms do not even allow foreigners to open new accounts, and securities firms require individuals to close their accounts and move their assets abroad if they leave the United States. Some companies, and in some cases the entire account type is unavailable due to workers’ alien status, such as the 529 plan, which requires beneficiaries to have a U.S. Social Security number (for individuals with nonnational dependents are virtually off limits), necessitating a different approach to college savings than is common in the United States. citizens.
Ultimately, successfully navigating saving and investing for a foreign-born worker depends on understanding the considerations and potential pitfalls of different savings strategies, their goals and plans (including potential international relocation), ) and, perhaps most importantly, considering uncertainty. Staying in the U.S. on a work visa allows you to remain flexible enough to protect your assets if your plans change. An advisor who can stay abreast of changes in immigration and tax laws and can help address these challenges will be invaluable to foreign clients, a growing potential client base in an increasingly global workforce. can play a role.