[marilina]

Hello, I have been working as postdoc at university in US and I have been on a H1B visa for 2 years and I think I qualify as resident alien (for tax purposes). I will soon terminate my employment and go back to my home country. I want to withdraw my retirement funds and the company that manage my retirement fund told me that I can take the money with me without paying any tax or penalty because I'm not US citizen and I benefit from the US-Italy treaty, and they gave me a form (W-8BEN) to fill out. However I think this is not the right form for me because I have been paying taxes and I don't think I'm exempt therefore I should probably fill out form W9. However the agency doesn't really know (they keep saying I don't have to pay taxes) but I'm ot sure and I don't want to make mistakes. Does anybody know how to proceed, which form to fill, and weather I have to pay taxes if I withdraw the money or if I can claim exemption under the US-Italy treaty? Thanks!
Marilina

[AtlantaTaxExpert]

Marilina,

Your skepticism is WELL justified. If you withdraw money from a 401K, 403B or similar plans, or from an IRA, you WILL be subject to taxation on that withdrawal, PLUS pay a 10% Early Withdrawal Penalty.

I recommend that you roll the pension money into a rollover IRA. Charles Schwab is a good choice for a custodian, but there are other custodians available. You can then manage the fund via the Internet from Italy, allow it to grow, then withdraw it when you reach 59.5 years of age.