Hi,
I work in usa and have a 401k and Ira investments. What happens to my money when I move. What would be withdrawal penalty? I heard it becomes 30% as now i am foreign investor?
Also i work for 6 years and have 24 ssn credits. I know there is a treaty between Canada and usa about sharing ssn credits?
Can somebody experience throw some light on such topics
Hi,
I work in usa and have a 401k and Ira investments. What happens to my money when I move. What would be withdrawal penalty? I heard it becomes 30% as now i am foreign investor?
Also i work for 6 years and have 24 ssn credits. I know there is a treaty between Canada and usa about sharing ssn credits?
Can somebody experience throw some light on such topics
I withdrew my 401K (it was a minimum amount because I wasn't contributing and was not 100% vested. It was all my employer's contribution). I"m not sure about the exact penalty as I was not concerned about it since I did not contribute at all.
What do you mean by "SSN credits"? I never heard such a thing. What I only know is credit history/score -- and if that's what you mean, yes, it was considered for our car loan here in Canada (Alberta). We got 0% interest. But not all institutions honored it, it was combined with luck I guess.
What I mean by ssn credit is, if u work in usa for 6 yrs and work in Canada for 4 years, you become eligible for social security at retirement. Hence you will get partial check from usa and other from Canada.
Canada usa has a treaty such that no matter were u work, your ssn credits are combined and counts towards ur retirement. In both countries you need to have total of 44 credits.
I believe Canada and US have agreements on retirement plans. Walk to a Service Canada office and ask them is it possible to merge US Social Security with Canadian retirement plans. Also let us know.
I assume you are compelled to withdraw the funds and use them? If not, why not leave them in the account you now have? I would believe you could not roll them over tax free (US) to a canadian account but I may be wrong. The penalty in the US is 10% on top of the income tax for early withdrawal.
Well I was thinking as follow
When u land in Canada, u have zero income in usa. Hence if u convert ur 401 to 401 Roth, u just pay the lowest taxes. Coz u have no income in usa, u r in lowest tax bracket.
And then u can always withdraw ur Roth principle if u need mOney. If not keep Roth and withdraw earning tax free even if u r canada
I wouldn't worry too much about the social security - that will be governed by tax treaties made in the future
As for 401K and IRAs, it would probably be worth your while consulting a professional. See here -
http://blog.taxresource.ca/moving-your-ira-or-401k-to-canada/
