Tax on 401K withdrawal after becoming US non resident

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NewCanadian
Posts: 75
Joined: Sun Mar 07, 2010 5:07 pm

Tax on 401K withdrawal after becoming US non resident

Post by NewCanadian »

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 »

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. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Re: Tax on 401K withdrawal after becoming US non resident

Post by nelsona »

Above applies to the US tax.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
NewCanadian
Posts: 75
Joined: Sun Mar 07, 2010 5:07 pm

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

Post by NewCanadian »

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 »

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. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
NewCanadian
Posts: 75
Joined: Sun Mar 07, 2010 5:07 pm

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

Post by NewCanadian »

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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