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    mathew123's Avatar
    mathew123 Posts: 2, Reputation: 1
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    #1

    Jul 25, 2009, 02:07 AM
    Early withdrawal of 401K
    Hi,
    I was working in US from 2000 May to 2004 May on HI B visa and I had $27781.0 in 401K. I am an Indian citizen with Australian permanent residency from 1992 onwards. In 2004 I moved to Australia and working here since then. Since I was bit concerned about my 401 K money without having any access there I decided to move into myself managed super anuation here. When I asked them about moving the fund to my retirement fund here, they told me that they can’t move it directly from there. Hence I took that money and put it in the super anuation fund here. They send me $22225. 0 taking 10 % tax and 10% penalty. When I did the tax return, some how I made a mistake and put 5556 as my income and they send me $5000.0. Later I was told by the IRS that there was a mistake in the tax return and I have to pay them back $2910. Is there anyway that I can avoid this penalty and tax since I have put it myself managed retirement fund?
    Thanks
    G. Mathew
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Jul 27, 2009, 11:56 AM

    If I follow your story correctly, what you're saying is that you took a withdrawal of $27,781 from your 401(k) but reported that you withdrew only $5,556 when you filed your taxes that year. Consequently the 20% that was withheld appeared to be too much, and you got a refund. Now the IRS has caught up with you, and say you owe them $2910 in back taxes and interest for having under-reported your income.

    Your only hope to avoid the penalties and interest would be if you could argue that rolling the money to your superannuation fund is a qualified retirement vehicle. You should contact an administrator of the fund in Australia and ask if they can help you with this. To be honest - I doubt that it will fly, especially since you took the money out yourself (it was not a direct rolllover), and also if you deposited less than the full $27781 in the superannuation fund within 60 day then it's not a full roll-over. But see what the Aussie professionals have to say.
    mathew123's Avatar
    mathew123 Posts: 2, Reputation: 1
    New Member
     
    #3

    Jul 27, 2009, 05:48 PM
    Quote Originally Posted by ebaines View Post
    If I follow your story correctly, what you're saying is that you took a withdrawal of $27,781 from your 401(k) but reported that you withdrew only $5,556 when you filed your taxes that year. Consequently the 20% that was withheld appeared to be too much, and you got a refund. Now the IRS has caught up with you, and say you owe them $2910 in back taxes and interest for having under-reported your income.

    Your only hope to avoid the penalties and interest would be if you could argue that rolling the money to your superannuation fund is a qualified retirement vehicle. You should contact an administrator of the fund in Australia and ask if they can help you with this. To be honest - I doubt that it will fly, especially since you took the money out yourself (it was not a direct rolllover), and also if you deposited less than the full $27781 in the superannuation fund within 60 day then it's not a full roll-over. But see what the Aussie professionals have to say.
    Thanks for your opinion ebaines
    G Mathew

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