IRA withholdings for NRA
Can IRA be established by ‘Non Resident Aliens’? I think they cannot.
In case IRA was established by US Resident and expat (currently living in Australia), should mutual fund redemption attract any withholding?
Any specific rules governing these? Would these get reported to IRS?
Permalink Submitted by Anonymous (not verified) on Fri, 2010-04-23 15:46
As far as I remember:
The critical thing is if the distribution is delivered outside of the US:
[u]Non-Resident Alien [/u](NRA) – needs W8-BEN on file to opt of 30% WH, then treaty rate applies which is mostly 0%.
[u]US Citizen living abroad [/u]- needs W-9 on file to avoid 30% WH, otherwise 10%. He/she can not avoid that.
[b]Can IRA be established by ‘Non Resident Aliens’?[/b]I would say “yes”, if the US husband/wife has the income or somehow has US derived income. It will become difficult for NRA to set up an account without a TIN. If custodian will set up without it, the 30% WH will apply on any distributions.
All scenerios will become more complex if you factor in address of record (US vs. Foreign), delivered to US address for NRA, delivered by ACH to US bank by NRA, etc.
IRS Withholding Rules:
http://www.irs.gov/pub/irs-pdf/p515.pdf
http://www.irs.ustreas.gov/pub/irs-pdf/p505.pdf
pko