Can I rollover my 401k to a similar account outside US due to my job transfer?

Question

I am neither a US citizen nor a green card holder. I came in as resident alien (MNC) on work visa and have funds in 401k account. I have been transferred to a country where there are no income taxes. They have a similar 401k plan (however no tax). Will I be able to rollover all my US 401k funds to my new account without any tax impact in US? In my next year there will be no US income and I guess I don't have to file return (since I am not a citizen or PR). Would it help if I withdraw or rollover next year?

Has anyone seen this done or done for themselves? Thanks for your time and any answer.

Answer 1

When you take a distribution from the 401k, taxes will be due unless you roll it over to another plan qualified under the IRS code. Foreign retirement accounts are not qualified plans, so this transfer would not be tax deferred.

If the amount of the distribution is small, you may not owe any income tax because of your standard deduction, but you will owe the 10% penalty. My advice would be to have that penalty withheld before you withdraw it, and then file a return for the year of withdrawal and pay the penalty.

If the account is large, you could take partial withdrawals over several years and avoid income taxes, but not the penalty.

Answer 2

No, you can't do that!

In order to do a tax-free rollover, the plan must be a qualified retirement plan. Foreign plans are not qualified retirement plans under the US Tax Code.

You may be able to leave the 401(k) in place and let it continue to accumulate. The plan administrator can let you know if that's possible.

Or you could do a tax-free rollover to an IRA here in the US and allow it to continue to grow.

If you simply withdraw the funds they will be fully taxed as ordinary income. If you are under age 59 1/2 when you withdraw the funds there will be an additional 10% penalty tax on top of any taxes due to the withdrawal.

Answer 3

yes