Ask Me Help Desk

Ask Me Help Desk (https://www.askmehelpdesk.com/forum.php)
-   Immigration Law (https://www.askmehelpdesk.com/forumdisplay.php?f=167)
-   -   Tax on 401k for green card holder leaving US (https://www.askmehelpdesk.com/showthread.php?t=570177)

  • Apr 13, 2011, 06:24 PM
    taxmeless
    Tax on 401k for green card holder leaving US
    Tax question:

    I am a green card holder and have contributed to company 401k for several years. I now wish to return to UK this year and abandon my green card. What is the best option(s) for my 401k plan in terms of minimizing taxes. Unfortuately I do not believe that I can transfer the money to a UK pension plan without large tax penalties. I have about $100k in the 401k plan. I have about 25 years to retirement. I was informed that even rolling the 401k into a IRA will cause 30% withholding as I am leaving the US, (1) can I recoup the 30% withholding on next years tax return (2) can I put the 30% back into the IRA all at once if IRA contributions are only $5000 a year

    The options that I see are (but there may be more):

    1. leave the money in the US by rolling it over into an IRA and withdrawing after 59.5, I will have to pay US taxes as a non-resident alien. Will this be 30% withholding or will US-UK tax treaty apply? Do I file 1040NR
    2. I take the money out of the 401k now, I will pay taxes (30%?) + 10% penalty.
    3. rollover 401k to IRA, then convert gradually to roth IRA
    4. rollover 401k to IRA, then withdraw gradually taking out each year up to the deduction allowed by 1040NR ($3000) and pay only 10% penalty.

    Any advice is greatly appreciated

  • All times are GMT -7. The time now is 06:06 PM.