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    JBerg's Avatar
    JBerg Posts: 1, Reputation: 1
    New Member

    Oct 25, 2006, 03:11 PM
    401K Early Withdrawal & Non-resident Alien
    I have been living in the US since 1996. I am married to a US Citizen. We plan to move to my home country, Czech Republic, in 6 years (2013). I have less than 100K in my 401K account now, however, with my current contributions, I will likely have around 230K at 2013 (depending on the market, of course).
    I believe that after we move, my status will change to the non-resident alien. I will also be only 46 years old at that time and not eligible to withdraw without penalty until 59-1/2. What is the best way for me to utilize my 401K: 1) at the age of 46 and 2) without a tax penalty? I realize that I may not be able to enjoy both, just looking for the best option.

    A separate question: If I chose to keep my money in the US 401K until the age of 59-1/2, can I then receive distributions being a non-resident alien? Or, do I need to roll the money over to another account?
    Thank you.
    guran2's Avatar
    guran2 Posts: 13, Reputation: 1
    New Member

    Feb 8, 2011, 03:25 PM
    Lots of questions regarding k401 withdrawals. The answer is really straight forward.
    1) If you withdraw before age 59 1/2 there is always a 10% US withdrawal penalty.
    2) Whenever you withdraw, you pay full tax, either in the US or in your country of residency. You pay tax on the withdrawal, on top of any other income, in the country specified in the tax treaty between US and the other country.
    3) As a non resident alien, you are not entitled to any standard deduction so there is no taxfree amount.
    4) The 20% withholding and 10% penalty may mean that you in the worst case have to expend more in tax and withholding than the full amount withdrawn, so you actually owe money instead. The withholding may in this case be reimbursed after the double tax return, the year after withdrawal.

    Consult a tax professional or risk a nasty surprise!

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