[thetrystero]

Hello,

I have been in the US under the F-1 Visa for 5 years, and have recently completed my OPT. I will be returning home very soon.

During my OPT, I had put money into my company 401k, which was then rolled over to an IRA when I completed the OPT.

Am I allowed to leave the money in the 401k until 59.5? Does that mean that I will have to file taxes every year even though I'm no longer in the US? If I open a ROTH IRA, am I allowed to continue investing money in that account from my home country even though I no longer hold a US Visa? What about just a regular money market savings account?

I was aware that I might be hit with at 30% flat tax at disbursement, so I filed the W8-BEN when opening the IRA. Is this all I have to do to prevent being put in the 30% flat tax bracket?

Thanks in advance!

[MukatA]

Yes, if you withdraw from 401K or Trad IRA, all the withdrawal will be treated as income. Also if you withdraw before 59 1/2 years of age, you will also pay 10% early withdrawal penalty.
Nonresidents should think twice before investing in any retirement plan in the U.S. What happens if you become disabled? How will you get the money when you don't have a bank account in the U.S.
Read more about IRA Your U.S. Tax Return: Traditional IRA and Roth IRA

[thetrystero]

I have several bank accounts in the US, so wiring money out will not be a problem. And it's precisely because of the taxes and penalty that you mention that I don't want to take the cash disbursement until I'm 60.

My question was more towards the legal issues. Can I legally leave this money in the IRA account or do I have to clear out any monetary footprint I have in the US and take all the cash with me to the airport?

Once home, I am able to still contribute to my ROTH by wiring money in and then transferring that money to the ROTH account. What does the law have to say about this (if anything)?

I don't want to end up in a situation where I'm putting money in regularly and then find out when I'm 60 that I'm going to have all of that money confiscated because of some clause in the law I'm unfamiliar with.

[AtlantaTaxExpert]

As far as I know, there is no LEGAL reason why you cannot maintain the IRA account even though you are no longer in the U.S.

No annual tax return will be due unless you take a distribution of income from a traditional IRA.

No tax return will be due for ANY distribution from a Roth IRA because, after a five-year waiting period, most distributions from a Roth IRA are completely tax-free.

[thetrystero]

Thanks ATE. That clears it up.

What about the 30% flat tax? Will I still be hit with that if I file the wait or will I be taxed at the regular rate on the trad IRA?

[thetrystero]

p. s.: I mean when I take disbursement after 60.

[AtlantaTaxExpert]

The 30% flat tax is on dividends, which is reported on Form 1099-DIV.

A disbursement is reported on Form 1099-R and is taxed as ordinary income.