PDA

View Full Version : Procedure to withdraw 401k money


contactsaurabh
Nov 17, 2006, 11:15 PM
Hi,

I was employed with an american firm till the end of September 2006. I am no longer living in the US.

I want to withdraw my entire 401 K amount early next year.

What is the procedure to withdraw the money ?

There is a tax penalty of 10%... when I receive the amount, will it be the full amount or will it be after deducting 10% ?

Please let me know the details...

Thanks

omzig
Nov 17, 2006, 11:39 PM
You need to contact the administrator of the plan to discuss your options. Unfortunately you not only have to pay the 10% penalty for early withdraw, but you also have to pay the income tax on the amount you withdraw because it was deducted from your pay on a pre-tax basis. I think that 20% of the withdraw is usually withheld for taxes.

Another option is to take a loan against the money in the account. Most plans have an option of doing this. You have to make regular payments on the loan, but the money goes back into the account, minus interest.

contactsaurabh
Nov 17, 2006, 11:48 PM
The thing is... I do not plan to come back to USA. Hence talking a loan and paying it back would not be a good option.

In 2007, this would be the only income that I would have in the US. The total amount is about $10K.

What do you suggest ?

AtlantaTaxExpert
Nov 18, 2006, 06:55 PM
Check to see if your country allows transfers from U.S.-based IRAs to a similar account in your country. If so, transfer the moey from the 401K to an IRA, then to your home country account.