What will happen to my 401k money if I leave USA permanently?
I am 33 years old and currently employed in USA on a work visa. I am contributing to my employer provided 401k plan since 4 years. I might be moving back to my home country once I max out my current work visa leaving my 401k account untouched.
I can withdraw by paying 10% penalty, but I am thinking to leave the money till I turn 59-1/2 years and withdraw what ever left by then.
Questions:
Is it suggestible to leave my 401k money when I leave the country for good? Is it possible to access my 401k money outside the USA, after leaving the country more than 20 years ago? If yes, what is the process? Can I open a bank account again when I am physically not in the country to access the money?
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Ask the company administering your 401(k) plan whether they will maintain the plan if you move permanently overseas. I believe the effort on their part will be limited to getting you to fill out a W8-BEN every three years, but apparently that is too much work for the bank running the IRA I rolled my 401(k) into, so go ahead and ask.
When you reach 59.5 and start withdrawing your money, it will have tax withheld. It may be possible just to let this go, and not file a tax return, but if you do have to file, the IRS wants to know about all your worldwide income. This could become expensive if you live in a country with low taxes or generous pensions, or if you are self-employed.
There seems to be some consensus that the best option is to rollover your 401(k) into an IRA with a global custodian such as Fidelity or Schwab, but be aware that while they may work with IRA holders in your country now, they can change that decision at any time, and you will be stuck trying to open a replacement custodian account from overseas, which in my experience is impossible.
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