Hello, I'm a J1 visa holder researcher from Korea, 27-year old single, non-resident alien for tax purpose. I have a several questions about my 401k and tax return and other details. I'm really desperate with lack of US tax knowledge and complicate situation. I hope someone rescue me and give me any advices.

Here's my situation. I came to WA, US from Korea on 3-31-06 and it's been 14months. I'm planning to go back to home country on 4-xx-08. I started my 401k with pre-tax contribution and have $18500 now. It's all of my payment not company matching. Since I'm staying as J1 visa holder, I was noticed I don't need to pay most taxes from my income. Everymonth, federal withholding and WA WORKERS' COMP Loc ER/EE taxes are taken out from my payment and I got my tax refund of federal withholding this year by 1040NR and form 8843.

Here's my first question about my 401k. Once I go back to Korea 2008, they'll charge me 20% withholding. It'll be my 3rd year with J-1 visa. Can I get tax refund for this 20% withholding completely for 2008 tax return? I heard from somewhere that J-1 visa holders can be tax exempt for their first 2 fiscal year only. If I'll not be a tax exempt for 2008 tax return, how much I can get tax refund? (at least assuming.. xx%)

If I cancel my 401k this year, they'll charge me 20% withholding and 10% penalty as well. But when I file for 2007 tax return, I guess I can get tax refund about 20% withholding. Am I right? Or I'm missing something? I'm considering if I can get fully tax refund of 20% withholding for 2007 tax return, it'll be better to cancel and lose 10% penalty. C

Actually I don't need this money right now. Even if I move to my home town, can I manage my 401k in Korea? Since I would not be employed by this company after 2008, I wonder whether I can still keep my money. Is this good idea or not?

Additionally, my company matches 4% of money when I contribute 8% for this 401k. I made my contribution from 50% to 0% since I don't know exactly what I'll do. Up to now, $18500 is my money and doesn't contain company's matching. Is it better to raise my contribution?

I read from anwers related to 401k about rollover to IRA to avoid panalty. Is it possible to rollover to Korea IRA with my 401k in US?

Is there any exit not to pay 20% withholding and 10% penalty as well while I live in my hometown? I definitely don't know about us tax and everythings are so much complicate for me.

This is my first job and it's my first money I've ever earned. So it means so much to me. I really appreciate for any help and advice, opinions. Also if there's anything you need to know about my situation to figure out more clearly, please let me know. I'll be here until someone can give me advice. Thank you so much!

I have NOT done definitive research on this, so please take this advice with healthy skepticism.

If your salary is completely exempt from taxes under the tax treaty with South Korea (for 2006 and 2007) due to your J-1 visa AND you request a distribution of your 401K in 2007, then, logically, you SHOULD be exempt on ANY tax (205 or 10% early withdrawal penalty) on that 401K distribution, especially since the money was withheld during the two-year tax exempt period.

This being the case, you should be able to convince the 401K custodian to NOT withhold any money from your distribution.

You have the option to roll the money into a U.S.-based IRA, but after the two-year period ends, the money becomes tax-deferred, which means you eventually will be required to pay taxes on the money, either when you take the money early or when you withdraw the money after retirement.

You CANNOT roll the money directly into a Korea IRA.

You need to seek the guidance of a tax consultant with experience in international taxation to make sure my advice is accurate.

This is my 2nd year under my J1 visa in USA and I'm wondering whether you could be my professional tax advisor and help filing my tax return for 2007 and 2008 also.

Last year 2006 was my first year in USA and I filed my tax return by myself.

I'll leave USA at the end of March 2008 and want to finish my tax return for 2008 also before I leave.

If you could, hope you to let me know your very reasonable costs.

Thank you!

Please contact me by email for a complete schedule of fees.

The earliest you can file your 2008 return is 1 January 2009. However, I have serviced clients from all over the world, do this is very doable. It may take a bit longer due to international mail delays, but it CAN be done.