srivatsann
Mar 16, 2014, 11:32 PM
Sorry for cross-posting in the taxes forum. I had posted in the retirement forum but no response so far.
In 2012, I transferred from US to India and am working for the same company from India. Initially my employer's 401(k) plan administrator said that I cannot rollover 401(k) to IRA since I would be employed in the same company. They also mentioned that I won't be able to contribute to 401(k), cannot take loan as I won't be an US employee.
After the transfer, 401(k) custodian called me and advised that I can rollover from 401(k) to IRA since I am no longer employed in the US and avail better investment options. So I did a direct rollover in 2013. I also did some early withdrawal in 2013 for meeting immediate financial requirements.
Earlier this month, my company has informed that this rollover was allowed inadvertently and I should return the money that I rolled over to IRA. Since I did an early withdrawal from the IRA in 2013, I cannot return all that was rolled over.
1) How will the amount I rolled over to IRA be treated? Would that be considered as a distribution?
2) If that is a distribution, then would I owe tax + penalty for the entire distribution and hence pay higher taxes for 2013?
3) If I have to pay tax for the entire rollover money, then will I be able to take the money out from my IRA custodian without having to pay extra tax? If I have to pay penalty and tax again for taking money from IRA, then it would amount to double tax + penalty.
Thanks in advance
In 2012, I transferred from US to India and am working for the same company from India. Initially my employer's 401(k) plan administrator said that I cannot rollover 401(k) to IRA since I would be employed in the same company. They also mentioned that I won't be able to contribute to 401(k), cannot take loan as I won't be an US employee.
After the transfer, 401(k) custodian called me and advised that I can rollover from 401(k) to IRA since I am no longer employed in the US and avail better investment options. So I did a direct rollover in 2013. I also did some early withdrawal in 2013 for meeting immediate financial requirements.
Earlier this month, my company has informed that this rollover was allowed inadvertently and I should return the money that I rolled over to IRA. Since I did an early withdrawal from the IRA in 2013, I cannot return all that was rolled over.
1) How will the amount I rolled over to IRA be treated? Would that be considered as a distribution?
2) If that is a distribution, then would I owe tax + penalty for the entire distribution and hence pay higher taxes for 2013?
3) If I have to pay tax for the entire rollover money, then will I be able to take the money out from my IRA custodian without having to pay extra tax? If I have to pay penalty and tax again for taking money from IRA, then it would amount to double tax + penalty.
Thanks in advance