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    thinketh's Avatar
    thinketh Posts: 7, Reputation: 1
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    #1

    Mar 11, 2007, 01:06 PM
    401k tax rate after leaving country
    Suppose I am leaving USA for good in 2007, but decide to leave the money in my 401k account, at age 45, with $10,000 in the account. I continue to work in my home country after that.

    If I want to take an early withdrawal of all $10,000 in 2012, at age 50. Also, since I am already out of USA at that time, do I have to pay taxes on the income from my home country? What will be the tax rate that withdrawal be taxed at?

    Thank you.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Mar 12, 2007, 10:30 AM
    Yes, you would have to pay taxes even though you are already in your home country.

    The 401K custodian will withhold AT LEAST 20% for taxes, and may withhold more due to you being outside of the U.S. to ensure you file a non-resident alien tax return to account for the early distribution.

    Depending on the size of the distribution, you would pay at least 25% (10% Early Withdrawal Penalty, 10% federal taxes, 5% state taxes), though 35% is more likely.
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