I am a naturalized U.S. citizen wanting to retire back in India. Does anyone know how the IRA distribution is taxed by India between Roth and Traditional ?
This will help me in planning for the upcoming Roth conversion option that is so popular in US this year.
Roth or Traditional -- what\'s good for R2I ?
Roth or Traditional -- what's good for R2I ?
alerion;333880I am a naturalized U.S. citizen wanting to retire back in India. Does anyone know how the IRA distribution is taxed by India between Roth and Traditional ?
This will help me in planning for the upcoming Roth conversion option that is so popular in US this year.
First of all, welcome to this wonderful forum. You will learn so much here
Second, you have put the question in a wrong place. It should be going to money/finance forum
Third, if you search this forum, you will find lots of information that will answer your question. If you still have any specific questions that are not already answered, then you are welcome to come back and ask. Enthusiastic and knowledgeable members of this forum will make all efforts to help you.
In short, you have to do your homework before you come and ask a straight question like this. Such questions have been asked and answered multiple times already. If you ask again, you might get answers, but then not as detailed as already answered. So, it would be to your advantage to first search before asking...
To quickly answer your question. Roth or Traditional IRA.. both are in USA. Indian Tax Authorities would not honor the tax benefits you get from these. An income from Roth or Traditional is just an income from Indian Tax perspective. Another way to look at it is:- Say you have a PPF account in India. Now, you come and talk to IRS about that PPF account. Their response would be "what??"
So, there is lots more you have to consider when deciding for Roth or not to Roth. You can get enough information in Money forums here.
-
investorvinay
- Posts: 65
- Joined: Thu Jul 02, 2009 10:32 am
Roth or Traditional -- what's good for R2I ?
Like gw said, you need to pay taxes to Indian Govt on any capital gains you generate in foreign tax sheltered accounts, including American IRAs (all types) as well as 401k's, Canadian RRSP's etc, etc.
If you're going to R2i eventually, stop contributing to your IRA accounts. It will be needlessly locked up until you're 59.5, while paying Indian taxes on any gains.
If you're going to R2i eventually, stop contributing to your IRA accounts. It will be needlessly locked up until you're 59.5, while paying Indian taxes on any gains.
Roth or Traditional -- what's good for R2I ?
But if i had a traditional IRA, wouldn't I only need to worry about taxation from Indian Gov. when i withdraw from it (i.e. after 59 1/2)?
Roth or Traditional -- what's good for R2I ?
goober71;334323But if i had a traditional IRA, wouldn't I only need to worry about taxation from Indian Gov. when i withdraw from it (i.e. after 59 1/2)?
If you have realized gains in your account for this year, you will pay to GOI for this tax year. If you have a "realized" gain next year, you will pay taxes for next year...
If you are able to defer realizing any gains until 59 1/2, then yes, you will pay only at that point of time.
But how would you defer realizing any gains? Even if you do not sell any funds/shares, you might still get dividends or other mandatory distributions into your account. These would trigger taxation in India immediately.
Of course I am talking of post-RNOR era.. Once you are an ordinary resident of India, the above holds good.
Roth or Traditional -- what's good for R2I ?
But "realized" gains only applies to dividends that are not re-invested, correct? Because, for my IRA (or 401K for that matter), they automatically re-invest dividends in the mutual fund that they are for.