IRA for nonresident alien
Client is a South Africa non-US citizen.
He worked for a US company in the US for a number of years, built up a substantial 401(k) which he rolled over to an IRA when he left the US company and moved back to South Africa.
Question is, is the US tax treatment of an IRA held by a nonresident alien the same as that of a resident or US citizen?
When he makes withdrawals, will they be subject to US income tax?
Will he have required minimum distributions when he turns 70-1/2?
Can he do a Roth conversion or will it be taxed like a US citizen converting?
Thank you in advance for you assistance,
Art D
Permalink Submitted by Arthur Dicker on Thu, 2016-12-01 15:37
Shouid say, can he do a roth conversion and if so will it be taxed like a US citizen converting?
Permalink Submitted by Bruce Steiner on Thu, 2016-12-01 16:27
The more difficult issue is whether the other country will give similar treatment to the IRA (in other words, not tax the income and gains in the IRA on a current basis).
Permalink Submitted by Arthur Dicker on Thu, 2016-12-01 16:44
Thank you, bsteiner, for your comment, but it does not tell me what the US tax treatment is. Maybe the answer is simple, yes, he will be taxed on IRA withdrawals and conversions just like a US citizen would be, but on a Form 1040NR??
Permalink Submitted by Jose Morales on Thu, 2016-12-01 17:36
https://www.irs.gov/individuals/international-taxpayers/nonresident-aliens-source-of-income
Permalink Submitted by Bruce Steiner on Fri, 2016-12-02 03:50
The payor will withhold at 30% or the tax rate under the applicable tax treaty, if any.