r2i forum

Hello Friends and Experts,

I am returning to india in next 10 days and wanted to know

Question 1:

what is the best option to withdraw IRA money and why?

Option 1: Before leaving US

Option 2: After returning to India

Option 3: After returning to india after x year

Question 2:

My IRA company has weird policy, i can only withdraw 50% right now and 50% will be annuitized over life time(say next 50 years) making annuitized income very low every year. So my another question is

Do i have to pay US tax every year for my annuitized income from India?


Thanks
Sidh

Sidh,

No IRA company has to policy you mention.

Be more specific which company. When and how did you establish IRA? Did you rollover 401K into an IRA or are you confusing 401K with IRA or some other plan? Did you by chance rollover 401K into an IRA annuity? What is your immigration status?

Thanks, actually its not IRA but some other retirement plan (i dont remember what) but the policy is what i mentioned. The plan is with ING and I havent rolled over anything. My immigration is H1B.

Hope this helps and sorry for not been very clear

Thanks in advance

Sidh,

Bobus can better answer than me on the taxability front on the annuitized income.

Even annuities can be cancelled prematurely for a surrender charge. Really without much more info on your plan, I may not be able to help much further. You have to look into the plan documents.

Thanks Desi, do you have any suggestions on my 1st question about my options

Question 1:

what is the best option to withdraw IRA money and why?

Option 1: Before leaving US

Option 2: After returning to India

Option 3: After returning to india after x year

Thanks once again
Sidh

Sidh,

You are on H1B and returning to India in 10 days. Considering above, your US taxable income would be just earnings in January. So I would withdraw IRA immediately before returning.
You should in all lielihood file taxes as a resident for 2007 as you probably will meet substantial presence test. However check that out in your individual case, but I would withdraw IRA moeny out.


If you want to keep a long term money invested in international markets, then you can put money in a regular taxable accouont at Vanguard and select appropriate funds. That is a separate step from liquidating IRA.

I am guessing that the amount of money in IRA is in tens of thousands and not hundreds, If in hundreds, a different strategy would be needed. Chances are you will escape state taxes. When you withdraw, elect NO witholding of state or federal taxes in the forms you fill out to withdraw.