Can a foreign resident beneficiary stretch out an inherited
Sister is a U.S. Citizen. Brother is the sole beneficiary of Sister’s IRA, around $350K. Brother is a Canadian citizen. Sister dies. Can Brother inherit the IRA and stretch it out, or is a lump sum distribution mandatory?
Permalink Submitted by Alan Spross on Sat, 2008-08-02 01:23
He should be able to stretch it out, however subject to mandatory withholding of taxes.
Permalink Submitted by Al Fry on Sat, 2008-08-02 02:55
Unless he has a US SSN; or a US Tax ID and files a W-8BEN with custodian, then no withholding if we have a tax treaty with Canada.
Permalink Submitted by John Lau on Sat, 2008-08-02 13:58
Al,
Would you clarify your response?
I don’t know if there is a tax treaty w/Canada or not, I can find out easy enough. Let’s say there isn’t, do you mean if the Canadian citizen applied for a tax id and files a W-8BEN, there would be no mandatory withholding; but in any event, a non resident beneficiary can stretch an inherited IRA?
Permalink Submitted by Al Fry on Sat, 2008-08-02 19:19
There is a tax treaty with Canada. Chack with your custodian to see if they want a W-8BEN from bene (must have a SSN or US tax ID #) to either exempt the withholding or lower it from 30% (Normal) to the 15% Treaty rate.