Hello,
I'm an italian citizen now living in Italy.
Between 1996 and end of 2001 I worked in the US under a H1B visa program.
I contributed to my 401k plan working with 2 different companies.
I'm now considering cashing out the retirement plan to help me paying off my house here in Italy. Beside that, I'm only 40 years old and I do not feel very comfortable leaving those assets for 20 more years in the US where it would be difficult for my children getting access to should anything happen to me and my wife :( .
I know that there is a 10% early withdrawal penalty.
I'm interested to know if there is any way I can avoid having the 20% tax retention since I'm a non-resident alien. Or if it is possible to get the money back filing a 1040NR under the US-Italy tax treaty.
Is there any way I can minimize taxes? What if I rollover the money on a retirement fund here in Italy?
Can anyone help me with some advise?
Thanks

Puga66:

There are provisions in U.S. tax law which allow you to roll the money over into U.S.-based Rollover Individual Retirement Accounts.

I do not know if you can roll this money into an Italian account, but I suspect that you can. If so, such a rollover would be tax-free.

I recommend that you contact an Italian tax professional to determine if this is possible.