how to open a retirement account? (pensions, moving, social security, federal)

[cheapcharly]

I m a new legal immigrant, i want to know how to open a retirement account. I know I can substrat 5200$ from my 1040form.

bank of America does that?

all tips to go down to 10000$ is welcome. I try to pay minimum tax. who want pay more anyway?

[bUU]

Many workers have a retirement plan through their place of employment, typically a 401(k) plan or a 403(b) plan. Check first to see if you are offered such a thing. That's generally a better deal than spinning your own retirement plan, because you are able to defer substantially more earned income from income taxes, that way ($17,500 in 2013 + $5,500 in "catch up" for those over 50). If that's not available to you, you can open an IRA account at most major brokerages and banks. You should be able to contribute up to $5,500 (+ $1,000 in "catch up" for those over 50), deductible on your income tax form.

I'd aim for a better custodian than Bank of America. We recently moved one IRA from Bank of America to Fidelity. That's what I recommend.

Keep in mind that just putting the money there is only the first step. You then need to decide how to best invest it. Generally, you'll be best off with low-cost index funds, diversified across asset classes, though it make take a few years to develop enough of a balance in the IRA to be fully diversified.

[Curmudgeon]

I'd also recommend a "standard" savings or money market account or similar instrument to place "liquid" savings, easily accessed without jumping through hoops or sustaining withdrawal penalties when the need for some extra cash arises due to unforseen circumstances. We always referred to our pension and 401(k) accounts as "Put 'n Keep" and our savings accounts as "Put 'n Take.

Whatever you do, with each paycheck, pay yourself first. Even now, retired and receiving four checks (direct deposits) a month from pensions and Social Security we continue to pay ourselves first.

[cheapcharly]

I have enough money for my self so put every year 5000 bucks and let it sleep for years is ok for me.

i m not even sure I will stay in the usa after I reach 50. I'm 45yo.
i may surrender my green card and look for better pasture.

my job is really bad paid. companies will do nothing for me... and i don't trust employers...
i have an account at bank of America since 1997 with some cash(35'000$) and all I want is to decrease my tax the lowest i can. I don't want to open another account.

stocks and bond is ok for me...

so I think i should contact my bank about this . I will go to usa in June.

by the way I have a fix term cd with 30000$, is it considered as a retirement account? . can I substract 5000 from my total income? .

[bUU]

Originally Posted by cheapcharly

i m not even sure I will stay in the usa after I reach 50. I'm 45yo. i may surrender my green card and look for better pasture.

It sounds like you're going to be out of luck, trying to avoid paying tax on your earned income:

Please note that IRA distributions sent to you at an address outside of the United States are subject to mandatory federal withholding of 10%. Should you decide to waive this 10% withholding, your distribution will then be subject to the treaty rate of your country of residence. The treaty rate ranges from zero to 30%.

(And, of course, if you try to take a distribution while still in the United States, you'll get hit with the 10% penalty, and you'll owe income taxes, which you would have to pay if you hope to ever return to the United States without being greeted by treasury agents when you arrive.)

Originally Posted by cheapcharly

all I want is to decrease my tax the lowest i can.

We all would like to do so, but there are laws that determine under what circumstances you can, and procedures that you have to follow in doing so.

Originally Posted by cheapcharly

I don't want to open another account.

If you wish to qualify for tax deferral, you must open another account. You can open it at Bank of America if you wish (but that's not the best approach), but you will have to open a new account, because you cannot deduct contributions to an account that was not opened, specifically, as a qualified IRA.

Originally Posted by cheapcharly

stocks and bond is ok for me...

That will make it even more difficult for you, as a non-resident, to withdraw the money before age 59 1/2.

Originally Posted by cheapcharly

by the way I have a fix term cd with 30000$, is it considered as a retirement account? . can I substract 5000 from my total income? .

No. You can only deduct income you earned for work. And you can only deduct it for the year that income was earned. And moving money you earned previously around doesn't qualify you for tax deferral. And to defer taxes, the earned income needs to be contributed to a qualified IRA.