Inherited IRA for noncitizens

Submitted by Chris McDevitt on Tue, 2013-09-10 15:19

Can a non US citizen stretch out an inherited IRA?
My client is 80+ and has a daughter that is a citizen of the Netherlands.
Also, do you know what the tax withholding rate would be on distributions to her?



Submitted by mk foss on Tue, 2013-09-10 16:28

  1. I know of no provision that would prevent a non US citizen from stretching out an inherited IRA.
  2. There is US withholding on IRA distributions sent outside the US. The rate is 30% of the treaty rate with that country, whichever is less.


Submitted by Jose Morales on Tue, 2013-09-10 16:35

Yes, a non-US citizen can use the single life expectancy table to calculate mandatory beneficiary distributions if all other facts and circumstances allow.  If the person is a resident of a country other than the United States, the would be subject to withholding on the distribution at the tax rate found in Publication 901.  For a person residing in the Netherlands, the current withholding rate for distributions from pensions and annuities is 0%.  The only difficulty they may find is in locating an IRA Custodian that wants to have an inherited IRA on their books for a person residing outside of the United States.



Submitted by Alan - IRA critic on Tue, 2013-09-10 17:18

What if the inherited IRA was a Roth IRA, and the beneficiary was in a 30% country? It does not seem logical that withholding at that rate should apply for a Roth, but was never able to find a documented exception for Roths.



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