[prakashgupta]

I've shifted to India a while back and now planning to withdraw 401k amount which in subject to 10% penalty and 30% taxes.

So far I used to file taxes using W2 form received from my company and using TurboTax software. Since I'm no more working in US, and would like to file taxes in 2013 for 30% of withhold taxes, I'm not sure how to go about it.

Can someone please help me this?

Thanks,
~Prakash

[AtlantaTaxExpert]

Prakash:

Since a 401k is considered to be 'deferred compensation", you can report the distribution and have it taxed on the progressive tax scale that earned income will be taxed at. You STILL report the distribution on Form 1040NR, but being taxed on the progressive tax scale allows you to claim your own personal exemption and start being taxed at 10%, then 15%, then 25%.

The 10% Early Withdrawal Penalty DOES apply, so you should perhaps consider rolling the money over into a rollover IRA, and then withdraw it incrementally to less the tax bite. I KNOW Charles Schwab will allow you to set up such a rollover IRA from India.

[prakashgupta]

Thanks a lot for prompt and helpful reply.

I'm not sure about Rollover IRA, a brief overview of how it is different from 401k or may be a pointer could be helpful, to be able answer questions like:

- What is maximum amount I can withdraw at a time?
- Is there an annual limit for withdrawal?
- Apart from less tax bite does it incur 10% penalty?
Etc

Currently I've my 401k in Vanguard, and after talking about Rollover IRA with customer care, they said I'm no more eligible since I'm no more residing in US and a Non-Resident Alien.

Does Charles Schwab allows Rollover IRA? considering:
- I'll move money from Vanguard to them
- I'm no more residing in US (I guess this holds as you mentioned) &
- A Non-Resident Alien

Thanks,
~Prakash

[AtlantaTaxExpert]

Contact Charles Scwab to set up the rollover.

There are no minimum or maximum distributions, but the 10% Early Withdrawal Penalty still applies.