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A friend of mine came to US to work for few years and he is forever going back to his original country because of personal reasons. He contributed to IRA, 401k and would like to take the money with him. However, since he has lot of years to go for 58, he is wondering whether he will incur heavy penalty and taxes from early withdrawal. Is there any way or qualified exception he can use ?

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  • Is he leaving the US for any "bad" reason (like family issues, hardship, etc.)?
    – Nosjack
    Commented Mar 13 at 16:50
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    Does it matter for taxes?
    – ewr3243
    Commented Mar 13 at 18:02
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    @ewr3243 yes, there are some conditions like "hardship", tuition, first home purchase, etc that allow qualified distribution.
    – littleadv
    Commented Mar 13 at 18:17

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Is there any way or qualified exception he can use ?

Not from what you've described.

One way I can think of would be using Sec. 72(t), i.e.: start drawing pension from these funds. That would make the withdrawals qualified, but would mean they're going to take a lifetime.

They might want to look into tax treaties their home country has with the US and whether a rollover across the border is a possibility (on the off-chance, I doubt it's possible).

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