{ "media_type": "text", "post_content": "European in the US here. My plan is to eventually go back to Europe. I am wondering how 401k would work tax wise for withdrawal. If I am not a tax resident, I assume taxes would need to be paid where I am a resident right? Would US make me pay taxes on that money? Appreciate any help here if someone has done more diligence on it. I am trying to decide how much to contribute 401k while I am in the US", "post_id": "61e5c98ad3ba0b002cfebeda", "reply_count": 2, "vote_count": 2, "bowl_id": "5abc4bc7cf9bd00013107acd", "bowl_name": "Global immigration ", "feed_type": "bowl" }

European in the US here. My plan is to eventually go back to Europe. I am wondering how 401k would work tax wise for withdrawal. If I am not a tax resident, I assume taxes would need to be paid where I am a resident right? Would US make me pay taxes on that money? Appreciate any help here if someone has done more diligence on it. I am trying to decide how much to contribute 401k while I am in the US

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I can speak for Germany. If you go back to Germany and spend more than 183 days in a year there, you are a tax resident there and all your income will be taxed there. 401k's will unfortunately be treated with regular 25% capital gains when you cash out, even if it is post retirement. There is currently some talk of bringing a 401k-style retirement savings vehicle in Germany under the new govt, but it's all up in the air. The tax-deferred advantage (and 401k counting as income i.e. income tax will be levied) that you would have if you stayed and retired in the US wouldn't apply in Germany. Here 401ks will be treated as investments and the 25% capital gains tax will unfortunately apply.

Understood thanks, for what I am reading we would also need to pay taxes in the us even as non-resident when we withdraw the money. But I guess we can wait till 59.5 then withdraw up to 40$k where you only pay 12%. Then I guess we should be able to get a tax credit for thst amount to reduce the bill in our resident country right? That’s how I am understanding it but not sure. If it’s 25% total still better to what I am paying here in CA now so would still be very beneficial

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