Any F1 Students (NRA) Succesful in Opening a Vanguard Account?

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caniinvest
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Joined: Fri Jun 29, 2018 2:34 pm

Any F1 Students (NRA) Succesful in Opening a Vanguard Account?

Post by caniinvest » Fri Jun 29, 2018 4:31 pm

I am on an f-1 student visa. My citizenship status and IRS status are both non-resident alien (Been here from August 2013). Due to not getting H1B visa my job ended and I am going to Canada in the next months. The prudential 401K from my last job has 6K$. I want to put it into index funds at Vanguard and forget about them.

I cant open an account online at vanguards website. I tried calling them but the agents said non-resident aliens cannot open accounts. I hanged up and called twice. I got the same reply. One agent upon my insisting did send me the application pdf to fill out but he said it will most likely be denied because I am NRA. This application has an option to select as NRA and asks W8-BEN which I can fill with no issues.

Should I try applying through the paper application and see what happens? I have about 30-35 days to rollover my prudential 401k.

Prudential also lets me just leave the 401k since its more than 5K but I am not sure of the fees and flexibility to move/withdraw funds lets say 20 years later.

I already have a Schwab account. If everything fails should I just roll over to Schwab?

My intention is to invest this 6k in low fee funds and forget about them.

sarabayo
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Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by sarabayo » Fri Jun 29, 2018 8:58 pm

Schwab has index funds too. I can't personally vouch for them but other threads on this forum seem to indicate that they're not really much different from Vanguard index funds. Here is one such thread: viewtopic.php?t=230218

So if you already have a Schwab account, it seems to me like the easiest thing is to just roll over your 401k into Schwab and buy their index funds, rather than get stressed out trying to fight with Vanguard when you're about to leave your job and move out of the country. Good luck!

Eneus
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Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by Eneus » Fri Jun 29, 2018 9:03 pm

I am also an NRA and must say I couldn't open an account even with Schwab. I called both Vanguard and Schwab. With Vanguard I was straight rejected, I also called few times. With Schwab there was a lot of back-and-forth, depending on who I talk to. Ultimately I went to their physical office and was rejected there, because I could not sign the paper form "I certify under penalty of perjury... that I am a U.S. citizen or U.S. resident alien as defined in federal tax regulations".
How did you open an account with them? I was under the impression that legally NRA's can't open taxable or individual retirement accounts while in US. I do have an employer sponsored plan, though, and apparently the plan provider is fine to keep me in.

caniinvest
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Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by caniinvest » Fri Jun 29, 2018 9:15 pm

Eneus wrote:
Fri Jun 29, 2018 9:03 pm
I am also an NRA and must say I couldn't open an account even with Schwab. I called both Vanguard and Schwab. With Vanguard I was straight rejected, I also called few times. With Schwab there was a lot of back-and-forth, depending on who I talk to. Ultimately I went to their physical office and was rejected there, because I could not sign the paper form "I certify under penalty of perjury... that I am a U.S. citizen or U.S. resident alien as defined in federal tax regulations".
How did you open an account with them? I was under the impression that legally NRA's can't open taxable or individual retirement accounts while in US. I do have an employer sponsored plan, though, and apparently the plan provider is fine to keep me in.
I went to the branch. I took all kinds of my immigration documents and gave them. Their background team checked for few days and opened an account for me. I think there is a line somewhere that asks to certify if we are a legal us person. we come under that.

caniinvest
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Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by caniinvest » Fri Jun 29, 2018 9:26 pm

sarabayo wrote:
Fri Jun 29, 2018 8:58 pm
Schwab has index funds too. I can't personally vouch for them but other threads on this forum seem to indicate that they're not really much different from Vanguard index funds. Here is one such thread: viewtopic.php?t=230218

So if you already have a Schwab account, it seems to me like the easiest thing is to just roll over your 401k into Schwab and buy their index funds, rather than get stressed out trying to fight with Vanguard when you're about to leave your job and move out of the country. Good luck!
Yeah, I am leaning towards that. I checked Schwab index funds and they are actually lower than Vanguard. I don't know if there is something I am missing because it seems too good to be true.

sarabayo
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Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by sarabayo » Fri Jun 29, 2018 9:53 pm

As some posters in the thread I linked mentioned, it's probably because many of Vanguard's competitors, like Schwab, are scrambling to differentiate themselves and gain back some customers which they've been losing to Vanguard in recent years because of the rise of popularity of index funds. One way to do that is to undercut Vanguard's prices or provide better customer service than Vanguard. Personally I'm using Fidelity and while I haven't had occasion to really strain the limits of their customer service, their website user interface at least is a lot nicer than Vanguard's website... :)

Eneus
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Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by Eneus » Fri Jun 29, 2018 10:33 pm

At those rock-bottom expense ratios other things begin to matter. Besides customer service, capital gains distributions of Schwab and Vanguard funds differ too. It doesn't matter for tax-advantaged accounts, I believe, but still those funds are not the same and IMHO should not be thought to be 100% equivalent.

OP, what kind of account do you have at Schwab? Taxable, traditional IRA or Roth IRA?

caniinvest
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Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by caniinvest » Sat Jun 30, 2018 9:36 am

Eneus wrote:
Fri Jun 29, 2018 10:33 pm
At those rock-bottom expense ratios other things begin to matter. Besides customer service, capital gains distributions of Schwab and Vanguard funds differ too. It doesn't matter for tax-advantaged accounts, I believe, but still those funds are not the same and IMHO should not be thought to be 100% equivalent.

OP, what kind of account do you have at Schwab? Taxable, traditional IRA or Roth IRA?
I have a brokerage account with Schwab. It would be easy to rollover a 401k to a new IRA. I don't have that already.

I looked at expense ratios, ten years history and turnover for the S&P 500 index funds at both places. They seem very similar. I don't know what capital gains distribution is but I will try to research that also.

Nate79
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Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by Nate79 » Sat Jun 30, 2018 10:12 am

caniinvest wrote:
Sat Jun 30, 2018 9:36 am
Eneus wrote:
Fri Jun 29, 2018 10:33 pm
At those rock-bottom expense ratios other things begin to matter. Besides customer service, capital gains distributions of Schwab and Vanguard funds differ too. It doesn't matter for tax-advantaged accounts, I believe, but still those funds are not the same and IMHO should not be thought to be 100% equivalent.

OP, what kind of account do you have at Schwab? Taxable, traditional IRA or Roth IRA?
I have a brokerage account with Schwab. It would be easy to rollover a 401k to a new IRA. I don't have that already.

I looked at expense ratios, ten years history and turnover for the S&P 500 index funds at both places. They seem very similar. I don't know what capital gains distribution is but I will try to research that also.
In a Schwab taxable account it is better to use Schwab ETF's instead of their mutual funds as the mutual funds may distribute short term and long term capital gains each year which you will need to pay tax on.

caniinvest
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Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by caniinvest » Sat Jun 30, 2018 10:47 am

Nate79 wrote:
Sat Jun 30, 2018 10:12 am
caniinvest wrote:
Sat Jun 30, 2018 9:36 am
Eneus wrote:
Fri Jun 29, 2018 10:33 pm
At those rock-bottom expense ratios other things begin to matter. Besides customer service, capital gains distributions of Schwab and Vanguard funds differ too. It doesn't matter for tax-advantaged accounts, I believe, but still those funds are not the same and IMHO should not be thought to be 100% equivalent.

OP, what kind of account do you have at Schwab? Taxable, traditional IRA or Roth IRA?
I have a brokerage account with Schwab. It would be easy to rollover a 401k to a new IRA. I don't have that already.

I looked at expense ratios, ten years history and turnover for the S&P 500 index funds at both places. They seem very similar. I don't know what capital gains distribution is but I will try to research that also.
In a Schwab taxable account it is better to use Schwab ETF's instead of their mutual funds as the mutual funds may distribute short term and long term capital gains each year which you will need to pay tax on.
I plan on using an IRA only. No tax issues.

Eneus
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Joined: Fri Apr 14, 2017 8:21 pm

Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by Eneus » Sat Jun 30, 2018 4:46 pm

I think, you have to open an IRA with Schwab and then rollover your 401k to that account. If you try to transfer money from 401k to a regular brokerage account, that money will be taxable like regular income. Rollover into IRA however is not a taxable event. I also don't think there is any diference whether you are a citizen or an NRA. I have never done it myself though.

caniinvest
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Re: Any F1 Students (NRA) Succesfull in Opening a Vanguard Account?

Post by caniinvest » Sat Jun 30, 2018 7:10 pm

Eneus wrote:
Sat Jun 30, 2018 4:46 pm
I think, you have to open an IRA with Schwab and then rollover your 401k to that account. If you try to transfer money from 401k to a regular brokerage account, that money will be taxable like regular income. Rollover into IRA however is not a taxable event. I also don't think there is any diference whether you are a citizen or an NRA. I have never done it myself though.
yes i will be doing a rollover IRA and not to my brokerage which will cost me 30% tax. I didnt think of the admiral class of vanguard before. Since my investment will be 6K only I dont think there is any benefit to me opening a vanguard account. Schwab doesnot have 10K requirement.

Schwab will get my business next week

daz
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Re: Any F1 Students (NRA) Succesful in Opening a Vanguard Account?

Post by daz » Mon Sep 10, 2018 5:54 am

does anyone know which brokerage houses allow NRA students on an F1 visa to open an account ?

thank you

Nate79
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Re: Any F1 Students (NRA) Succesful in Opening a Vanguard Account?

Post by Nate79 » Mon Sep 10, 2018 10:06 am

daz wrote:
Mon Sep 10, 2018 5:54 am
does anyone know which brokerage houses allow NRA students on an F1 visa to open an account ?

thank you
Try Interactive Brokers?

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randomizer
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Re: Any F1 Students (NRA) Succesful in Opening a Vanguard Account?

Post by randomizer » Mon Sep 10, 2018 10:08 am

Why not invest the $6k back home?
87.5:12.5, EM tilt — HODL the course!

harrad
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Re: Any F1 Students (NRA) Succesful in Opening a Vanguard Account?

Post by harrad » Mon Sep 10, 2018 11:39 am

Can you clarify on how you have a 401k? I presume that you had an OPT/CPT and during that period you had made those contributions.

I don't believe you can file an 1040 but will be rather filing an 1040NR. In such a case, it will be interesting to see if you can reduce your taxable income with the 401k contribution or any future IRA investment you make.

I would suggest you avoid opening any account with Schwab as it will tend to complicate issues during tax filing. You may have issues as you are not a US resident for tax purposes.

Remember that your particular situation is quite rare. Even the most experienced tax professional might not be aware of the intricacies involved. I would tend to be careful about any information from the background team - the issues are complex and they may leave you hanging.

daz
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Re: Any F1 Students (NRA) Succesful in Opening a Vanguard Account?

Post by daz » Tue Sep 11, 2018 6:55 pm

Clarifying my earlier post, I am using this same thread to ask a question for my cousin. She is a non-reisdent alien who recently arrived in the US on an F1 student visa. Will Vanguard allow her to open a brokerage account? Or will another brokerage allow her to have an account ?

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