401k Investment!!! Is it Good thing for guys planning to to go back Homecountry

[qwertyisback]

For canadians, No problems. Whats difference between US and Canada?? Canada is just little brother of US and follows whatever US asks to. Canadians don't have to care about this thing, they can just drive and be in US whenevr required.
This is more specific to those who won't live in US continent...we can start a new poll and see, I bet very handfull will keep their 401K in US while leaving US permenently . What I am trying to figure out is how to withdraw money from 401K most efficiently from TAX perspective. But I am getting very few leads in that direction. Any ideas???

 

[AmericanWannabe]

For canadians, No problems. Whats difference between US and Canada?? Canada is just little brother of US and follows whatever US asks to. Canadians don't have to care about this thing, they can just drive and be in US whenevr required.
This is more specific to those who won't live in US continent...we can start a new poll and see, I bet very handfull will keep their 401K in US while leaving US permenently . What I am trying to figure out is how to withdraw money from 401K most efficiently from TAX perspective. But I am getting very few leads in that direction. Any ideas???

What about borrowing money from your 401K and not returing it?
Since you are not in the USA any more by then, who cares
about any punishment.

 

[qwertyisback]

What about borrowing money from your 401K and not returing it?
Since you are not in the USA any more by then, who cares
about any punishment.

Thats illegal. I won't suggest such actions in any circumstances. But if you want, its your choice.

 

[AmericanWannabe]

Thats illegal. I won't suggest such actions in any circumstances. But if you want, its your choice.

It is illeagl and perjury too to apply for a re-entry permit without intent
to come back.

 

[qwertyisback]

It is illeagl and perjury too to apply for a re-entry permit without intent
to come back.

Who told you that?? I see illegal intent in your malicious advices to members (in your previous post No 42), if somebody does that you are party/responsible for such illegal acts.

 

[TheRealCanadian]

For canadians, No problems. Whats difference between US and Canada?? Canada is just little brother of US and follows whatever US asks to. Canadians don't have to care about this thing, they can just drive and be in US whenevr required.

You'd be surprised at the number of restrictions that are placed upon my Canadian funds, by the IRS and the State of Georgia of all places.

This is more specific to those who won't live in US continent...we can start a new poll and see, I bet very handfull will keep their 401K in US while leaving US permenently.

Qwerty, you can narrow down the sample size until you get the result you desire. However, the same principles still apply - if you can have access to your account from your home country, you are far more likely to get the best rate of return and security of your money in the United States than in 99% of the countries around the world.

If you are confident that India (or whatever your home country is) has the strong economy, stable currency and (most importantly) business transparency and legal safeguards that you feel safe keeping your money there for 30+ years, then you are welcome to go through this exercise of transferring your IRA/401K money there. Based on my own reading of the economy, investment regulation and especially the legal system, I have very little confidence that in the long run, you would get a better rate of return outside the US.

 

[qwertyisback]

FYI, this year, my 401K gain is -3.5%, thats very encouraging .
And whatever return is, I will have that money in the country where I will live, thats for sure.

 

[TheRealCanadian]

FYI, this year, my 401K gain is -3.5%, thats very encouraging.

Remember, you're in it for the long run. If you want year to year security, get a CD. You're guaranteed your 2% before taxes.

And whatever return is, I will have that money in the country where I will live, thats for sure.

That's true. And if you put it under your mattress, you will be even closer to your money. The question I am attempting to emphasize is that physical proximity is less important than security when it comes to money. The fact that many developing nations suffer from capital flight or low net FDI is proof of this. Silly foreigners are happy to invest, while the savvy locals are getting their money the heck out of Dodge.

The reason I post, however, is to ask you - have you considered a Roth IRA? This might give you tax-free compounding in a secure environment, while at the same time not be subject to any tax on withdrawals.

 

[qwertyisback]

Remember, you're in it for the long run. If you want year to year security, get a CD. You're guaranteed your 2% before taxes.

Today its -3.7%, getting more worse... And I know many people who stopped contributing to 401K after their near to complete loss few years back. And you can't go by past records, you can loose in long run as well. So don't count on it, You might need to keep it under your mattress or whatever to keep it safe. .

The question I am attempting to emphasize is that physical proximity is less important than security when it comes to money. The fact that many developing nations suffer from capital flight or low net FDI is proof of this. Silly foreigners are happy to invest, while the savvy locals are getting their money the heck out of Dodge.

All your point of view is based on your situation, I won't bother to touch 401K if I am canadian. (atleast now, few bad yrs and I will join other host of friends to swear "not to contribute 401K"). I repeat "Whoever geinuely planning to leave US for good will take their 401K withdrawl.(except canadian )

The reason I post, however, is to ask you - have you considered a Roth IRA? This might give you tax-free compounding in a secure environment, while at the same time not be subject to any tax on withdrawals.

I heard about it, but it also got same regulation... RIGHT?? Can not withdraw before 65 or penalty blah blah.....

 

[TheRealCanadian]

I know many people who stopped contributing to 401K after their near to complete loss few years back. And you can't go by past records, you can loose in long run as well.

Stock brokers clearly state that past performance is no indication of future results. One thing I will point out, is that there is no 10-year period where North American equities had a negative return. None. Not in the Depression, and not in the recent crash. I started investing in 1995, right before the bull run and crash, and I'm still averaging around 5-7% per year over that entire period. My 401K was up 30% in 2003 and 2004.

Yes, there were times in 2001 when my and my wife's IRAs were down 45%. I had a $41,000 investment (which I didn't pay for, but was a taxable dividend so I did pay some tax on it) in Nortel turn into $2,993.

If your tolerance for losses is such that one or two bad years cause you to stop investing, then you should not invest in equities at all, no matter what the country. Statistically, in the past 30 years the typical stock market market return has been in the area of +25%, or -20%. Very little in the middle. So for any given year or two you can make or lose a lot of money. But overall, you make money.

All your point of view is based on your situation, I won't bother to touch 401K if I am Canadian.

Qwerty, you completely miss my point. What I have been suggesting in this thread is two-fold. First, place your money in the country that has the best combination of returns, security and legal protections. If your home country and the US are equal on that front, leave the money where it is, since the penalties and taxes on repatriating tax-deferred investments make cross-border transfers expesnive.

So as a Canadian, the returns, security and legal protections are roughly equal. Therefore, my Canadian RRSP (roughly analagous to an IRA) remains in Canada, and my IRA remains in the US. Even if I returned back to Canada, this would stay the same; the IRA would continue to grow here.

Are you from India? Do you honestly believe that the financial climate there provides the regulatory protections for your money, and the greater returns will offset your penalties? If you do, then take your money there. But if you're having qualms merely about US equity investments, then developing markets are a hair-raising exercise of a whole new magnitude.

I heard about it, but it also got same regulation... RIGHT?? Can not withdraw before 65 or penalty blah blah.....

Opinions without knowledge can be expensive. Read up about a Roth IRA, and then come back. Here's a hint: Roth contributions can always be withdrawn tax-free. Roth returns (ie. profits) can be extracted after 5 years, I believe, without penalty or any income tax whatsoever.

Do I have your interest yet? or is it more "blah blah"?

 

[AmericanWannabe]

The bad thing abotu Roth is amount allowed is too small

 

[TheRealCanadian]

The bad thing abotu Roth is amount allowed is too small

Yes, it's not a lot. It was $3,000 per year, it's now $4,000. Don't forget that you and your spouse can contribute. You and your spouse each contribute $4,000 per year in 2005, 2006, 2007 and 2008. You then leave for your home country and ignore the Roth until 2028.

Assuming a rate of return of 8.25% per annum, wanna know how much money you will have completely and utterly tax-free? Just over $176,000.

Show me mattress that can beat that.

 

[qwertyisback]

Yes, it's not a lot. It was $3,000 per year, it's now $4,000. Don't forget that you and your spouse can contribute. You and your spouse each contribute $4,000 per year in 2005, 2006, 2007 and 2008. You then leave for your home country and ignore the Roth until 2028.

Assuming a rate of return of 8.25% per annum, wanna know how much money you will have completely and utterly tax-free? Just over $176,000.

Show me mattress that can beat that.

Such a rosy picture. Doesn't it?? This all funds and retitremnets accounts are nothing but handle for all BIG money brokers. They have no obligation but just priviledge to play around those BIG BUCKS. And they sell their ideas to the likes of you and many more.

if you just keep investing in 401K IRA/ROTH/education/529/1040/...blah blah, for the sake of life after 30years!!!! So what about current life?? I would rather enjoy $10000 now than forgetting that money for life after 30years. I will definately make sure that I won't go food/shelter less at that age, and anyway what you need at the OLD age(if you live that long!!!) apart from viagara. So whats point having million then, Its better to enjoy thousands now.

 

[AmericanWannabe]

I will definately make sure that I won't go food/shelter less at that age, and anyway what you need at the OLD age(if you live that long!!!) apart from viagara. So whats point having million then, Its better to enjoy thousands now[/B].

I often told people who worry about money for retirement that way too.
I think it is very great and lucky for anyone to live up to 80 years old and
use up all saving and become a pennyless bum. Many rich people can die
in 50s. 60s, 70s due to cancer, diabetis, stroke and at least you past that.

 

[TheRealCanadian]

So what about current life?? I would rather enjoy $10,000 now than forgetting that money for life after 30 years.

One of the hallmarks of emotional and financial maturity is the ability to defer immediate gratification in favor of some medium- or long-term (greater) goal. My three-year-old daughter has managed to get to the point where she understands that in order to get something she wants down the road (like a story and bedtime snuggle) she needs to do something right now that she doesn't necessarily want to do (like finish her dinner).

There are a lot of folks that think like your statement above. They live for today and have a wonderful time. They've had a wonderful time for 20 years now. Unfortunately, they have a house with no equity in it, $15,000 in credit card debt, about $5,000 in savings and they're about 8 weeks away from financial collapse when they get laid off in favor of some immigrant who's half their age.

I don't advocate saving so much that you wear a hair shirt and live in a cardboard box. However, the reality is that people who are sensible and smart in their savings when they are in their 20s and 30s can reap huge rewards down the road.

My goal is to retire when I'm 50, without having to move to a Third World country. That basically means accumulating enough savings so that the mortgage is paid off and I have enough to live for the next 40 years after that. I can assure you, qwerty, when you're 50 with little savings you'll be worrying a lot, and you will have a self-fulfilling prophecy - people who worry a lot don't live too long.

Besides, in 20 or 30 years the way India is going the cost of living will be so high that your little American nest egg won't be worth very much after you transfer it over and pay the penalties. Maybe some Infosys executive can employ you as his gardener and your wife as a nanny for his kids.

 

[Bindaas]

What if

I just withdraw all my retirement(IRA,401K blah blah) money and get the hell out of here without paying a penny tax later?
I know I will not be able to get my Social Security money that Govt has been snatching away from me every pay check. Why not I componsate there?

Any comment ?

 

[AmericanWannabe]

I just withdraw all my retirement(IRA,401K blah blah) money and get the hell out of here without paying a penny tax later?
I know I will not be able to get my Social Security money that Govt has been snatching away from me every pay check. Why not I componsate there?

Any comment ?

If you work for 10 years, then you can get SS retirement benefits even
if you leave the states

 

[qwertyisback]

I just withdraw all my retirement(IRA,401K blah blah) money and get the hell out of here without paying a penny tax later?
I know I will not be able to get my Social Security money that Govt has been snatching away from me every pay check. Why not I componsate there?

Any comment ?

Bad LUCK.Tax is held at source(while distribution of 401K/IRA). So you have to file Tax return to get it back.

 

[qwertyisback]

My goal is to retire when I'm 50, without having to move to a Third World country. That basically means accumulating enough savings so that the mortgage is paid off and I have enough to live for the next 40 years after that. I can assure you, qwerty, when you're 50 with little savings you'll be worrying a lot, and you will have a self-fulfilling prophecy - people who worry a lot don't live too long.

The countries which you call as Third World, has very simple life demands. MONEY is not all to have good/respectful and enriching lifestyle.(Atleast in my country INDIA). In India,I don't need to be super millionarie to have good life after retirement. But this so called Advanced countries (US, Canada, blah blah), life is nothing if you are not rich before/after retirement. So go for it and save as much as you. Otherwise you might need to flip/serve burgers after retiremnt. .

For me, needs are much simpler back in my country. If I can afford home/apt+some extra cash for everyday expenses, Thats it. LIFE is wonderful Back there. I/family would be more happy their with less money than million in US after retirement.

 

[AmericanWannabe]

In India,I don't need to be super millionarie to have good life after retirement. But this so called Advanced countries (US, Canada, blah blah), life is nothing if you are not rich before/after retirement. So go for it and save as much as you. Otherwise you might need to flip/serve burgers after retiremnt. .

The reason is exactly that the poor people in the world world countries are too miserable so that the middle class can take advantage of that.
Here in the USA, even a professor only makes 3 or 4 times as much as
a nanny but in poor countries a middle class workers can make 10-20
times more as nannies there. Thus you can afford to hire nannies, servants
but in the USA you can not.