Tax on 401K withdrawal after becoming US non resident

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NewCanadian
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Joined: Sun Mar 07, 2010 5:07 pm

Tax on 401K withdrawal after becoming US non resident

Post by NewCanadian » Sun Jan 12, 2020 11:40 pm

I lived in Canada before coming to US. I worked for 10 years in US and have significant 401K. I do not have US green card.
I lived in India before coming to Canada.

My question is on taxation on withdrawal from 401K. Is there a tax withheld for US non resident on 401K withdrawal?
If yes, what are the options?
If no, I want to explore a special provision in India called RNOR- Resident but not Ordinary Resident- wherein for up to 3 years, foreign income is not taxed in India due to being away from India for at least 7 years.

nelsona
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Re: Tax on 401K withdrawal after becoming US non resident

Post by nelsona » Mon Jan 13, 2020 6:15 pm

For CDn resident. The tax will be 15%, or 30% if lumpsum. PLus 10% early withdrawal if under 60. You may file a 1040NR to recoup some.
You wil have to explore the India angle elsewhere.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
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Re: Tax on 401K withdrawal after becoming US non resident

Post by nelsona » Mon Jan 13, 2020 6:16 pm

Above applies to the US tax.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

NewCanadian
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Re: Tax on 401K withdrawal after becoming US non resident

Post by NewCanadian » Wed Jan 15, 2020 8:26 pm

Thank you.
So partial withdrawal of say $50,000 per year from 401K will have US tax withholding of $7,500
Is MFJ allowed for 1040NR?
If yes, then would same standard deduction apply for non residents?

nelsona
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Re: Tax on 401K withdrawal after becoming US non resident

Post by nelsona » Thu Jan 16, 2020 4:54 pm

There is no MFJ nor standard deduction for 1040NR. And if you reside in India, the tax might not be 15%, it may be 39% plus 10% penalty if you are under 60 yrs old,

For the taxation of Indian residents by IRS please consult another website.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

NewCanadian
Posts: 72
Joined: Sun Mar 07, 2010 5:07 pm

Re: Tax on 401K withdrawal after becoming US non resident

Post by NewCanadian » Fri Jan 17, 2020 9:29 am

Thank you.
I plan to stay only couple of winter months in India and split remaining time equally between US & Canada.
On retirement, I will most likely be Canadian resident paying taxes on world income.
I plan to available medicare by paying part B plus high deductible medicare supplement plan to cover contingencies during my stay in US which will be less than 6 months

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