[van_sharma2001]

Having returned to India from the US (being there on L1 visa for a couple of years) in early 2008, I left behind funds in my retirement funds. I am looking to withdraw them over 2009 and 2010. Can someone advise on how I can figure my tax liability if , say I withdraw $20k in 2009? Fyi - I will not be having any US income in 2009, only in India.
Basically I'd like to minimize my US taxes, even if that means withdrawing in small quantities over a couple of years. Thanks.

[AtlantaTaxExpert]

If you withdraw the money in amounts in excess of the allowable periodic withdrawal amounts, the withdrawal will be subject to a 10% Early Withdrawal Penalty which cannot be mitigated by deductions or personal exemptions. That means the 10% is paid OFF THE TOP, with no offseting deductions or credits.

The allowable periodic withdrawal amount is based on actural tables for your entire lifespan. Example: If you have $40,000 in the IRA and the acturial table shows you have 40 years to live, you could withdraw $1,000 per year and NOT pay the 10% Early Withdrawal Penalty,

So, in all likelihood, if you make any withdrawals, you WILL pay the 10% Early withdrawal Penalty. That being the case, why not leave it there and manage it from India via email. If the 401K fund custodian will not allow it, Charles Schwab will allow you to roll the money over into a traditional rollover IRA.

[IntlTax]

I agree with ATE. The 10% penalty is something that many people temporarily present in the U.S. do not think of when they make contributions into U.S. retirement plans.

[MukatA]

If you withdraw 20K in 2009 and you do not have any other income in the U.S. then
penalty $2000
Your taxable income $20K - $3600 (approx) = $16,400. Income tax will be around $2,000.
So you will get net $16,000.