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    RSStearns's Avatar
    RSStearns Posts: 1, Reputation: 1
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    #1

    Mar 31, 2009, 07:45 AM
    India tax treaty with respect to 401A distributions
    I am a tax preparer working with some Indian clients who are here as visiting professors/researchers. While working at the local university they were participating in the 401A program. When they left the university and the country to return to India they took a total distribution of the 401A account. What taxes (if any) must be paid on the distribution?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    May 24, 2009, 09:15 AM
    Assuming the retirement program is tax-deferred, they will pay normal income taxes plus a 10% Early Withdrawal Penalty.

    The fact that their salary was tax exempt is irrelevant to the tax treatment of the early distribution.
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