OT: 401k/IRA transfer to another country retirement plan
- Thread starter techy2468
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Jackolantern
Registered Users (C)
Transferred without paying US taxes at the time of transfer? I seriously doubt it. The US will want their taxes. They won't let you get away without paying taxes when you transfer the money.
Just roll everything into an IRA, with a brokerage that has good web access, and leave it in the US. You can change your address to a foreign address, and they'll still mail your annual statements abroad (I know eTrade will do that, but verify with any other brokerage first). Some brokerages even have offices in many other countries. Fidelity is in India, for example.
What advantage are you hoping for by moving the funds to another country?
Just roll everything into an IRA, with a brokerage that has good web access, and leave it in the US. You can change your address to a foreign address, and they'll still mail your annual statements abroad (I know eTrade will do that, but verify with any other brokerage first). Some brokerages even have offices in many other countries. Fidelity is in India, for example.
What advantage are you hoping for by moving the funds to another country?
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Leaving funds in USA
when u leave US Could be very costly because when u become resident of some countries like India, they slap a 30% tax on all earnings. If you are leaving US for good, like me, then start transferring all ur assets. As for as 401k/IRA it depends on how your new country will treat you. I'm from India and I know that I have to live in India for 2 years continuously before being subjected to Indian tax laws.
Therefore my plan is to extract one half of my 401k/IRA savings in 1 year (reducing the amount of tax I have to pay to US) and the other half in the next year. If you have GC then you can file taxes as married and get a higher standard deduction. If not then you and your spouse (assuming spouse also has 401k) will have to file separately and use the standard deduction for individuals.
when u leave US Could be very costly because when u become resident of some countries like India, they slap a 30% tax on all earnings. If you are leaving US for good, like me, then start transferring all ur assets. As for as 401k/IRA it depends on how your new country will treat you. I'm from India and I know that I have to live in India for 2 years continuously before being subjected to Indian tax laws.
Therefore my plan is to extract one half of my 401k/IRA savings in 1 year (reducing the amount of tax I have to pay to US) and the other half in the next year. If you have GC then you can file taxes as married and get a higher standard deduction. If not then you and your spouse (assuming spouse also has 401k) will have to file separately and use the standard deduction for individuals.
Jackolantern
Registered Users (C)
That's only withholding, not actual tax. You can get most of it back when you file taxes the following April. They have a high mandatory withholding rate for non-US residents because if they under-withhold it is too difficult for them to recoup the tax.
Why not leave it in the US, unless you are planning to spend it before retirement?
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OT: Also, what about the SSN money...
If one is leaving permanently, can we get back the SSN that we have paid ( considering most of us do not have 40 credits, and even if we do, most folks think SSN will become bankrupt.
Sometime ago, someone told me that the Indian government is trying to look into it.
Did you guys hear any updates about it? -- Hopefully, they could roll it over into our PF?
If one is leaving permanently, can we get back the SSN that we have paid ( considering most of us do not have 40 credits, and even if we do, most folks think SSN will become bankrupt.
Sometime ago, someone told me that the Indian government is trying to look into it.
Did you guys hear any updates about it? -- Hopefully, they could roll it over into our PF?
Jackolantern
Registered Users (C)
Your SSN money is gone if you leave, unless you are a citizen of one of the countries with which the US has a good reciprocal agreement (and India isn't one of them yet).
Fortunately for me, I am from one of the countries on the list and I'll be able to collect SS at retirement age even if I leave. However, in 30+ years when I am that age, SS will be in serious trouble and I can see them cutting most of the foreigners out of the list.
Fortunately for me, I am from one of the countries on the list and I'll be able to collect SS at retirement age even if I leave. However, in 30+ years when I am that age, SS will be in serious trouble and I can see them cutting most of the foreigners out of the list.
Is this money available to us as something we can take a loan, maybe during potential hard times, etc? Or is it totally gone?
if I leave US right now and come back after a year on H1, will I get the same SSN #? Or is that lost too and how do they know if I will never come back?
Jackolantern
Registered Users (C)
Gone, gone, gone into a black hole. Unless your country eventually makes an agreement with the US that would allow you to collect at retirement age, and makes it retroactive for the years you've contributed in the past.
You keep the same SSN for life, unless there are exceptional circumstances requiring you to change it (like the witness protection program). I originally came to the US as a student, got an SSN so I could work on campus, then went back to my home country upon graduation. When I returned to the US a few years later I used the same old SSN for my H-1 job and credit cards and everything else.
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US will take 10% penalty + whatever taxes you are subject to based on your earnings when withdrawing. The penalty is void once you reach 59.5 years.
Now, if someone is going to India and start earning at INR 10 lakh/year (20k $/yr).
They will fall in a very low tax bracket and can withdraw the 401k money without losing substantial amount of it. I do not know about the tax consequences of such withdrawal in India.
Roth is your after-tax investment. So the principal can be withdrawn without any pentlty (I think after 5 years of opening the account).
Do not count too much on the SS money or medicare. The government will visit this monster of a problem and do something about it without cutting your benefits too much. The easy way out would be to inflate the currency so that although the benefits amount will stay the same; the purchasing power of the benefit amount may be halved.
Now, if someone is going to India and start earning at INR 10 lakh/year (20k $/yr).
They will fall in a very low tax bracket and can withdraw the 401k money without losing substantial amount of it. I do not know about the tax consequences of such withdrawal in India.
Roth is your after-tax investment. So the principal can be withdrawn without any pentlty (I think after 5 years of opening the account).
Do not count too much on the SS money or medicare. The government will visit this monster of a problem and do something about it without cutting your benefits too much. The easy way out would be to inflate the currency so that although the benefits amount will stay the same; the purchasing power of the benefit amount may be halved.
huh !!! what's withholding and not tax. Once you become resident of India which is 2 years of continuous residence, any earning in any part of the world will be taxed by India at 30%. So all the Non-Resident Indians use the Non-Resident status to withdraw all their savings in an appropriate manner while minimizing the tax in USA.
If you are from India check out www.r2iclub.com
Is it gone completely even if you have acquired 40credits ? Wont you receive it in India (at the age when you are leigible for it) ? This si pretty surprising to me.
Jackolantern
Registered Users (C)
I was talking about US taxes. The place that holds your 401k will withhold 30% to the IRS if you are a non-resident alien. When you file US taxes you figure out the actual tax and get a refund for the difference. Indian tax may be on top of that, so that's another issue.
Jackolantern
Registered Users (C)
You could have 200 credits, you still won't get a cent if you're no longer living in the US and are not a citizen of one of the countries with which the US has an agreement (I'll find a link to that list later).Is it gone completely even if you have acquired 40credits ? Wont you receive it in India (at the age when you are leigible for it) ? This si pretty surprising to me.
Is it gone completely even if you have acquired 40credits ? Wont you receive it in India (at the age when you are leigible for it) ? This si pretty surprising to me.
I think if you have 40 credits.....it may not be totally a lost case....but it depends on your country of residence.......
Jackolantern
Registered Users (C)
To those who want to transfer the money out of the US but don't plan to spend it before retirement, what are you hoping to gain? Why not roll it into an IRA and leave it in the US until retirement?
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I agree with you......that is the only option if we dont want to pay the 10% penalty.
somewhere i had read that you can withdraw money from your 401k before 59.5 years...........but you have to withdraw the total amount in lumpsum......in equal annual installments.........
another question: lets say we wait till 59.5 age, whatever we withdraw will be subject to tax, right?..........are they going to deduct at source???
i am afraid, that what we end up being subject to dual tax? since then we will also be resident of some other country...
A psychological closeness to YOUR money is the prime factor. You never know what kind of legal procedures you would have to go through 20 or 30 years down the line to get your IRA in vanguard or fidelity. Also you never know what tax structure your country of residence at that time will have. This is especially true if you are moving out of US without a USC or a GreenCard as your chances of taking the next flight to US and deal with the company here are practically nill.
Also the taxation system in your country of residence might be that you may want to take your money now. If you are from India you can repatriate your money without paying taxes in India for the next 2 years. So it makes sense to withdraw all the money in sizable chunks by minimizing the tax in USA and by just paying the 10% penalty and getting it tax free in India.
Oh you can also reverse the question. Why is it that you want to leave it in US ? Do you think this is the only economy that will survive in the next 30 years ?
Jackolantern
Registered Users (C)
They will withhold 30% if you are not a US resident.
Most countries don't double tax, they usually let you credit the taxes paid to one country against the taxes of the other. However, the net result may be that you pay the taxes of the higher country.
For example, suppose US taxes you 20% and your country taxes you 30%. Credit the 20% paid to the US against your home country's taxes, and pay 10% to your home country... you still pay 30%, the higher of the two.
But it all depends on the tax laws of the country you are living in at the time, and your citizenship at the time. The only certainty is that the US will tax it.
The only advantage I can think of for removing it from the US is if you go to a country that has no capital gains tax. Pay the US tax and 10% penalty, put it into a brokerage account in the new country, and it remains tax free no matter how much it grows. But of course, in 30 years that country could introduce a capital gains tax, in which case you'd get double-taxed and have no legal way around it.