GC renouncement Questions

thankful said:
It depends on what other income the person will have. Only 40 SS credits will probably yield you a pittance due to the required formula they use to calculate payments.
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It's not so little that it's a pittance. Use the SS calculator below, entering the "age you stop working" as the age when you complete your 10 years of SS contributions (to simulate leaving the US upon completing those 10 years).

http://www.ssa.gov/retire2/AnypiaApplet.html
 
Jackolantern said:
It's not so little that it's a pittance. Use the SS calculator below, entering the "age you stop working" as the age when you complete your 10 years of SS contributions (to simulate leaving the US upon completing those 10 years).

http://www.ssa.gov/retire2/AnypiaApplet.html
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It depends on how you define pittance.

This is how they compute your retirement benefits:

Step 1- We determine the number of years of earnings to use as a base. If you were born after 1928, that base number is your 35 highest years of earnings. Fewer years are used for people born in 1928 or earlier.

Step 2- We adjust the earnings in these years for wage inflation. We call this "indexing."

Step 3- We determine your average adjusted monthly earnings based on the number of years in step 1. (If you don't have earnings in 35 different years, some years with $0 earnings will be used to figure this average amount.)

Step 4- We multiply your average adjusted monthly earnings by percentages in a formula that is set out by law. If you turn 62 in 2007, that formula adds together:

90 percent of your first $680 of average monthly earnings,

32 percent of the amount between $680 and $4,100, and

15 percent of everything over $4,100 to give you your full retirement benefit amount. (If you start your benefits before you reach full retirement age, this amount will be reduced.)

If you become disabled or die before you reach full retirement age, we may use fewer than 35 years of earnings to calculate your average monthly earnings, but the same basic formula is still applied to figure your benefit amount.

You also can go to our Benefits Planner and use the earnings shown on your Statement to calculate your estimates yourself.

Simple: The problem is that if you worked for only 10 years you will have twenty five years of zero earning factored into your calculation. This will seriously pull down your benefit amount.
 
thankful said:
Simple: The problem is that if you worked for only 10 years you will have twenty five years of zero earning factored into your calculation. This will seriously pull down your benefit amount.
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Did you actually try to use the calculator? Even with 25 years of zero I still get over $500/month. Not enough to pay all the bills by itself, of course ... but unless you have a huge retirement account or generous pension, the extra $500 or even $100 per month makes a worthwhile difference when you're that age and not working.
 
You must have a HUGE amount of money, if you consider hundreds of dollars per month every month in retirement to be too little to be worth the trouble of filling out some paperwork to collect it.
 
Jackolantern said:
You must have a HUGE amount of money, if you consider hundreds of dollars per month every month in retirement to be too little to be worth the trouble of filling out some paperwork to collect it.
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I am set in life financially but I do not have a huge amount of Benjamins. :)
 
thankful said:
I am in a position where I will not have to worry about a couple hundred bucks a month.
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Which implies having a huge amount of money. Huge doesn't have to mean billions.

For over 99% of the current and former US citizens and green card holders, a few hundred dollars per month in retirement will make enough of a difference to be worth the trouble of collecting it. You are the 0.1% exception.
 
Nowadays, a million$ in bank does not mean much especially for retirement, and I'd try to get a few hundred $ from SS account with all the trouble.
 
Another question

What happens to my 401(k) after I renounce my GC? If I withdraw before 59.5 yrs old, do I still need to pay 10% penalty? Also, how much tax do I need to pay? If I withdraw a small amount each year, does that mean I only pay the lowest income bracket each year?
 
Yee Man Chan said:
What happens to my 401(k) after I renounce my GC?
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You can leave it there as long as you want.
If I withdraw before 59.5 yrs old, do I still need to pay 10% penalty?
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Yes.

Also, how much tax do I need to pay? If I withdraw a small amount each year, does that mean I only pay the lowest income bracket each year?
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That is complicated. As a non-US citizen living outside the US you might have to pay the nonresident 30% rate. But there are international tax treaties and other variables involved depending on your country of citizenship or residence, so it might be lower. In addition, the tax you pay will depend on the laws that apply when you take the money out, and who knows what that will be in 10 or 20 or 30 years. So there is no simple answer to your question.
 
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I don't know. This is not a tax forum. There are US firms that specialize in multinational taxation, for nonresident aliens with US income or US residents/citizens with non-US income. Contact one of them, or spend the time between now and April researching how to do it on your own.

Having said that, I expect the firm that holds your 401k will automatically withhold the 30% tax and the 10% penalty, once they know you have become a nonresident alien. Then it will be up to you to try to reclaim some of that 30% based on the treaties and other laws that are applicable to you.
 
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Yee Man Chan said:
Another question

What happens to my 401(k) after I renounce my GC? If I withdraw before 59.5 yrs old, do I still need to pay 10% penalty? Also, how much tax do I need to pay? If I withdraw a small amount each year, does that mean I only pay the lowest income bracket each year?
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This is outside the ambit of an immigration forum. Talk to a tax lawyer.
 
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