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    Cellarman's Avatar
    Cellarman Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Feb 5, 2009, 02:42 AM
    401k - to close and withdraw or not -leaving the country?
    Hi!

    There are some matters I cannot fully grasp about my 401k.

    Here is the situation:

    I signed-up for it in November 2007 when I was married (and just before I knew I was getting divorced) and when my company assured us they would soon match our contribution to 100%. It did not happen, due to the state of the economy...
    Since I signed for it I contributed for about 3600 $ (and lost about 18% of it).
    I am a Permanent Resident but I have to go back to my home country because of a new job and I could certainly use the money to rebuild my life over there, since I don't know if I'll have the opportunity to live again in the US.

    My yearly income is about $45,000 and I contributed for about 6% of my salary...

    What should I expect in terms of penalties and taxes and what would be the process to close and withdraw the totality of my account? Is there such thing as a tax rebate for losses on a 401k, upon closure? And if yes (which I doubt), upon what terms?

    I believe this might be a redundant question, but it would be great if someone could help me understand all the steps I need to go through.

    Thanks in advance!
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #2

    Feb 5, 2009, 05:13 AM

    Loss on 401k is not deductible as it was never taxed before.
    Withdrawal from 401k is income.
    You will also pay 10% early withdrawal penalty. The 401K administrator will withhold about 20% taxes.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Feb 10, 2009, 02:48 PM
    IF you REALLY need the money, then withdraw it and pay the taxes.

    If you CAN, however, it would be better to roll the mone over into a traditional IRA and LEAVE IT in the U.S. to grow for your eventual retirement. I know Charles Schwab will accept the rollover and allow you to manage it from your home country via the Internet.
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