401(k)

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

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tvinar
Posts: 9
Joined: Tue Jan 15, 2008 8:38 pm

401(k)

Post by tvinar »

I have some 401(a)s from my employer and I plan to leave the US mid-year. I plan to roll the 401(a)s into traditional IRAs before I leave, and then later that year use them towards purchase of my first home (outside of US).

My question is: assuming that I complete the purchase within 4 months (which I am not sure 100% that I will be able to), should I ask for the distribution BEFORE or AFTER leaving US? Does it matter?
nelsona
Posts: 18677
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Remember that the distribution is income, so if taken after returning, will be reported in both US and canada. Your home purchase merely avoids the 10% ADDITIONAL penalty.

So, ideally, you would withdraw before leaving US, if possible, and purchase the home within the time limit.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
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