Hi
I am not a US citizen that has been working in the USA for three years under a H1B visa and now I am going back home. I have money in the company’s pension fund but I don’t know the best strategy for it. My understanding is that I can leave it there and take it out when I am 60, or take it out now and pay the tax penalty. Is there a way to avoid the tax penalty? Because I can’t open a IRA because I am not staying in the US, so I wanted to know if there is other solution.

You can withdraw it. You will pay 10% early withdrawal penalty and the amount will be taxed as your regular income. Since you are return back, in 2010 you will not have much income so you will pay no or little income tax on the withdrawal.

Actually, I know for fact that you CAN open an IRA with Charles Schwab, then roll the money over from the 401K into the Charles Schwab IRA, even though you will be leaving soon. Once the accountis open, you can manage it from your home country using email and the Internet.

Charles Schwab caters to an international clientele (their website is available in multiple languages, to include Chinese), so they are more than happy to get your business. Give them a call!

Thanks a lot for your help, tax issues are sometimes very confusing.

Glad to help!