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  1. #1
    youngeurope is offline Junior Member
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    ira distribution for non residents

    Hi,

    do non-residents have to pay federal tax on a IRA (401k) account at time of distribution?

    Thank you

    G
  2. #2
    Snipes5 is offline Senior Member
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    Please clarify what you mean by "non-resident". Do you mean Non-resident Alien? Or are you a US Citizen who doesn't live here?

    Snipes
  3. #3
    youngeurope is offline Junior Member
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    I am a non-resident alien.

    Thanks
  4. #4
    Snipes5 is offline Senior Member
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    Ok, and now for my next question. How did you manage to obtain a 401K if you are a non-resident alien? If you were here long enough to obtain a 401K, it stands to reason that you were here long enough to meet the substantial presence test and be taxed as a citizen, although technically I suppose that doesn't matter.

    Since the 401K is US Source income, you will need to file a 1040NR for each year you make withdrawals from the 401K, and may or may not owe taxes, depending on how much you withdraw.

    The only income not taxable to non-resident aliens would be income that is NOT US Source.

    Snipes
  5. #5
    youngeurope is offline Junior Member
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    I worked for 7 years in the US and contributed to my employers 401k plan before I moved back to Europe 7 months ago. At this point, I'm a NRA with assets in a 401k account. Suppose, I'd want my money back do I have to pay federal tax or can I claim a tax treaty (Austria).

    Thanks
  6. #6
    Snipes5 is offline Senior Member
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    If I were you I would contact the US Embassy and get the number for the IRS office there.

    You most definitely must pay taxes on withdrawals from a 401k plan, regardless of status.

    Snipes
  7. #7
    youngeurope is offline Junior Member
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    Thank you for your response.
  8. #8
    Snipes5 is offline Senior Member
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    Oh, and one more thing...

    A 401K is not the same as an IRA at all. If you mix up the terms you will confuse anyone who is trying to help you.

    Susan

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