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Has anyone used Aaron Bro’s for moving?
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I think you should do this after you move to India. Start moving the money the year you don’t get paid in US at all. And only withdraw the amount that corresponds to zero taxes (lowest bracket). That way you only pay the 10% penalty but it’ll take a few years for you to take it all out.
Yes, this works...and if you withdrwe small enough money, you get your taxes returned next year when you file taxes..
It's hard to avoid penalty. Best is to withdraw in small increments ($12k per year) I think in the years after you resign. So you are not taxed on the withdrawal, only penalized. Basically, withdraw in the years your US income is low so your tax is lower. Penalty still stands.
With COVID, you are able to withdraw up to 100k penalty free. You still pay taxes.
D1 l, you are right. You have to pay the taxes over three years and not the distribution itself.
Just for all your information, when you file your US taxes as a non resident, you are not eligible for standard deduction.
D4, you are right. I was planning to respond to M2 but you did first.
You may have to research it a bit further, but there is a provision/law where you can withdraw a fixed amount on a monthly basis especially when you earning 0 income in US. I had looked it in detail once but can’t remember top of my head. But in that provision you cannot change that withdrawal amount ever and receiving account number or else you pay fine.
You are talking about rule 72(t), which allows you to opt for SEPP for withdrawals. I may have to look into it, if that’s the only option.
This piqued my interest. I need to research more on this. I pushed all my friends to put money in 401k. Anyways just found a website called r2iclubforums.com which seems to be forum for people moving back to India. Looks like people have successfully transferred 401k without much loss in money. The details seems to be scattered around.
I am on this forum for years. The method is not that straightforward or definitive. Follow posts from Desi.
Following as I also want to withdraw the 401K and move money to India
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I have been thinking about the same lately. Appreciate this post and the responses above
Withdraw in small amounts. That is the only way.
Resident but Not Ordinary Resident i.e. the period for which India doesn’t levy any taxes on you once you have moved back to India from a foreign country. The duration of RNOR period varies for an individual depending in how long he has been outside India, and a few other factors. You can find calculators online.
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I would leave the money in the States and make sure that I have enough investments back home to take care of me unless the money is absolutely needed. For the same reason, I don’t touch my HSA either.
If you have planned properly then it won’t be hard and it will be hard to beat the performance of S&P 500 anywhere in the world. From my perspective, your Indian investments should take care of you in India while leaving your US retirement investment here.
If you are so worried then read about Roth conversion ladder which is an excellent way to plan for retirement. It can also be used to transfer certain amount of money every year to India once you leave.
I tried reading thru this but a majority of it went way over my head 😔
You can remove it in 3 years when you move to India. If you move in Jan/feb , you can remove it in March for 3 years and it will be taxed minimum + penalty as you will not be earning any in usd. India allows to repatriate that amount without tax when moving to India..check Indian tax laws if they changed recently as this is old information