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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: HankERJourney on May 27, 2014, 02:28:27 AM

Title: 401k and Non-USA citizen question on TAX
Post by: HankERJourney on May 27, 2014, 02:28:27 AM
Hi everyone,
Hope you can help, it is about 401k and how I can lower my Tax on pay-outs (after 60 years of age) if you are not USA Tax resident. Basically, I have worked for 2 years in USA/Texas, and created a 401k via Company, but now I am not living anymore in USA, and I do not have a green Card. When am I 60 or older, I like to take out payments from this 401k Account, but if possible, avoiding too much Tax. I understood that sometimes a 30% Tax is applied to foreigners, but are there Strategies to lower this?
(a) Tax treaty with your Home country. This applies to the Netherlands, but I might not live in the Netherlands when I am 60 or older. But in case I do, How can I ask the 401k organization in the USA to get zero Tax in USA on 401k Payout? Do I need to proof that it will be taxed in the Netherlands?
(b) In case the Tax Treaty does not apply: What If I reduce the Pay-outs to small amounts per year, like 10k USD per year, will that lower the Tax in USA? Or will I get 30% regardless?

Thanks if you can help me!
Title: Re: 401k and Non-USA citizen question on TAX
Post by: johnintaiwan on May 27, 2014, 08:16:31 AM
If you don't have a green card and are not sure you will be living in the us in the future, you might want to take out the money and pay the penalties. I am not sure what they are, but I wouldn't want to leave money in a country I don't if I will be able to live in again. Might be something to consider. Especially if you will be hit with a high tax when you go to take it out.