401k-> IRA rollover and withdrawal options for a non-resident alien
Hi, I am in a unique situation. I was resident in the US (state of KY) on an employment visa from 2005-2010. During this period I contributed to my employers 401k which I rolled over into an IRA account before leaving the country permanently in 2010 due to employment reasons..
I am now based in Europe and have no future plans of taking up employment in the United States. The problem that has come up is that the company that manages my IRA has said that they can not continue to manage my account anymore as I do not have a legal US address. I have some questions..
1) Is this legal. I was very specific while opening the account that I was leaving the country and had no plans to contribute further to the account but didnt want to withdraw due to the pending tax implications and was told that this was fine and that the retirement would grow over time ..
2) I contacted a couple of other companies such as Fidelity and Vanguard to see if I could do a direct rollover and they say that if I had opened an account with them before leaving, I could have continued to manage it but I can not open a new account with them since I am not legally resident in the US..
The amount in the account is not much ..around 10k lets say.. It was around 7k about 5 yrs back when I rolled over the IRA and I did not make any contributions to it, it has grown based on the investment portfolio..
What are my options?
If I withdraw how much tax will i Incur on it?
Thanks in advance for any help, some fo the experts here can provide..
Permalink Submitted by mk foss on Fri, 2015-01-02 22:41
Changes in privacy and banking losses have made it very difficult for anyone with a U.S. IRA and a foreign address. IRA distributions to an address out of the country are subject to withholding of U.S. income tax. The rate is 30% unless a lower rate is specified in the tax treaty between the U.S. and your country of residence. The high withholding rate is because the U.S. thinks it’s unlikely that non resident aliens will file a U.S. tax return. If you cash in the account, there will be high withholding tax but then the problem will be over.