What happens to my 401K if I leave the US for India?
View your credit file based on any of the UK credit reference agencies, or all three at once
LifeLock is the only Identity Theft Prevention Solution backed by a one-million dollar guarantee!Click here to get a 10% discount.
I plan to leave for India in another 6-7 years. Currently I am enrolled in a company specific 401K plan. Will I get taxed in both India and the US upon withdrawal? What about early penalty since I'm leaving the country for good? At the time I expect to become a US citizen (Currently H1B holder with Green Card applied for). Any help will be appreciated.
Also, can I use a (no-penalty) loan from 401K towards my first home purchase when the property is in India?
Links supporting answers would be ideal but not necessary.
What happens to my 401K if I leave the US for India?You do not have to take out your money from 401k. Let it sit there. You can manage your account online and its legal to have your money sit in 401(k) while you move out of US.
When you retire, you will pay US taxes and then Indian government might want its share of tax. But there are laws to avoid double taxation. Since you will be paying taxes in US, you will not be paying taxes in India. Atleast not full tax rate.
Do not take out the money from 401k when you leave US. That will require you to pay US Taxes + US 10% Penalty. Plus the hassle of double taxation forms in India. While you are settling there, you do not want another paperwork in your table.
And yes, as Ethens pointed out above, you can roll it over to an IRA. which is a much better option.
My strong advice, do not take out money from your nest egg. Its going to hurt you 100% guaranteed.
More Related Questions and Answers ...
The loan information post by website user , we not guarantee correctness.