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I left the USA for India in January 2019. I retained my traditional IRA and 401(k) accounts because there is a penalty for premature withdrawals apart from the tax liability.

  1. Can I convert part of my traditional IRA into a Roth IRA for 2019? What are the tax implications for this conversion? I am almost sure that I will have to file my 2019 US tax return as a non-resident alien.

  2. When I turn 59.5 I will be able to take withdrawals from the IRA. How will they be taxed if I am not in the USA?

  3. Can I contribute to a traditional IRA for 2019?

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Your question is really several unrelated questions which depend in part on some unknown facts. So I'll try to summarize:

First, you mention you moved out of the US in January 2019. Unless you meant December 31, 2018, you may still be a part-resident, part-nonresident in 2019 (for tax purposes), depending on what made you a tax resident to begin with.

A contribution to an IRA in 2019 only makes sense if you have potential US tax liability to begin with. If not, there is no point in making an IRA contribution because...

When you are 59.5, receiving IRA distributions will generate US source income.

Note that there is a US-India tax treaty and that may change these results (I didn't take a look at it).

And, of course, there is Indian tax law to consider as well.

All in all, it's not that simple. Reading this may help a bit.

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  • @"Jack FIeeting" I left the USA on 1/31/2019. I have a potential tax liability because I received a salary from my employer in January 2019. Also, I have contributed to traditional IRA in previous years. My H1-B visa made me a tax resident. Jan 27 '20 at 3:24
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401(k) should be rolled into an IRA once your employment relationship ends since 401(k) is an employer-specific savings vehicle. IRA can be rolled into Roth IRA in any year where your US tax liability is low.

When you are over 59 1/2 years, the traditional/Roth IRA distribution can be taken as periodic payments and treated as a pension. Some IRA trustees are finicky about treating the IRA as a pension. In that case, you can buy an annuity within the IRA. Pensions/annuities are taxed at 0% (not applicable if its a lumpsum IRA distribution) when being distributed to NRA resident in India as per the US-India DTAA. The IRA income distribution will be taxed as ordinary income in India but probably at a much lower rate than the 30% default withholding for all distributions made to NRAs.

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