I have lived in the United States and have a sizable amount of money in a 401(k) managed by MassMutual there. However, I'm looking at buying a home where I currently live, and the exchange rate is good, so it's a good time to look into getting the money out.

I don't plan to retire in the US and don't have any income there. I also don't have any permanent residence in the US.

What's the best way to get the money out with a minimal tax penalty? Should I withdraw $8000 (standard income tax deduction amount) every year until it's all gone?

  • 3
    How old are you? Where do you live now? – Michael May 2 '17 at 11:53
  • Also, related: money.stackexchange.com/questions/16171/… – Michael May 2 '17 at 12:19
  • I'm not near retirement age, if that's what you mean. I also don't think that I'll be retiring in the US, and as I mentioned, I'm not a US citizen. – Mark Gulati May 2 '17 at 16:54
  • Isn't the early withdrawal penalty seperate from taxes? – jamesqf May 2 '17 at 17:52
  • I don't know if I can avoid the early withdrawal penalty, which I believe is 10%. I'm only going to minimize the tax burden by withdrawing a little at a time. – Mark Gulati May 2 '17 at 20:32

Unfortunately, nothing is ever that simple. Do you have any income in the country where you currently live? The US has tax treaties with many countries, and though you may not have tax on the income generated by 401(k) withdrawals in the US, that income may be taxable in your home country. Your best bet at this point is to hire an accountant that is familiar with US tax treaty issues and pay for some advice.

  • I am not a citizen of the US, so I'm not subject to the citizen taxes. – Mark Gulati May 2 '17 at 16:53
  • @MarkGulati Some of the specific wording in my answer changes as a result of your update, but the bottom line is the same. – Nathan L May 2 '17 at 17:06
  • Thank you, I'll look into any tax treaty issues. I don't doubt that the country I'm in would want to miss out on any tax income. – Mark Gulati May 2 '17 at 20:31

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