Retirement & SS benefits -what happens after 6 years?

J

jaykay47

Registered Users (C)
Hello,

I'm on H1-B and have invested in retirement plans (IRA & 401K) in the US. I plan to move back to India what happens to those savings ? How will I be taxed & penalized for withdrawing before I leave this country. Can I withdraw the amount when I'm in India ?

How about the SS benefits ? What is the best ways for investment ( with tax benefits) while in the US for less than 6 years.

Do let me know where I can find more info on this.

Thanks.
 
Originally posted by jaykay47
Hello,

I'm on H1-B and have invested in retirement plans (IRA & 401K) in the US. I plan to move back to India what happens to those savings ? How will I be taxed & penalized for withdrawing before I leave this country. Can I withdraw the amount when I'm in India ?

How about the SS benefits ? What is the best ways for investment ( with tax benefits) while in the US for less than 6 years.

Do let me know where I can find more info on this.

Thanks.
Click to expand...

YOu will be taxed and penalized 10% when you withdraw your 401k before reaching retirement age. Does not matter if you are in India or US.
SS benefits are available only if you have worked for 10 years total in US and paid SS taxes for those 10 years.
 
Thanks to both for your reply.

If I withdraw my IRA / 401K after returning to India , will I be taxed on my current income in India or ???
 
Originally posted by jaykay47
Thanks to both for your reply.

If I withdraw my IRA / 401K after returning to India , will I be taxed on my current income in India or ???
Click to expand...
There is a default at source federal deduction of 10% and a penalty of 10%. You get 80% of the amount you withdraw. There is no escaping either of these deductions. You can possibly claim some relief in India for this tax paid in the US. India and US have a tax treaty and individuals are not subject to double taxation.
 
Is it possible...

...that on returning to India, one withdraws a set amount, say $8500 every year from 401K and then when you file US taxes for that year, the standard deduction being $8500, pays zero tax (gets refund of the 10% Fed tax deducted at source) and only end up paying the 10% penalty?

However I'm not sure if the standard deduction for a non-resident filing is at $8500 too.

titu
 
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