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401k

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  • 16-08-2012 12:25am
    #1
    crapmanjoe
    Registered Users Posts: 472 ✭✭


    Not sure is this the right forum for this but give it a shot I guess

    A couple of months back my employer enrolled me onto a 401k scheme and I'm just curious has anyone had any experience of what happens if you leave the US permanently

    Can you roll it into an Irish scheme?
    Is it better to just leave it in the US and draw down from there

    If I decide to actually leave the US I will get professional tax advice so this question is more just genereal thoughts / out of interest.


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    #2
    [-0-]
    Closed Accounts Posts: 3,981 ✭✭✭[-0-]


    I'm not quite sure but I know that I cannot bring my Irish pension over to the US. I can only draw it when I retire. I imagine it's the same.


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    #3
    Palmy
    Registered Users Posts: 350 ✭✭Palmy


    You can cash your 401k out,but i think you just pay a higher tax rate when you do.;)


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    #4
    spideog7
    Registered Users Posts: 1,230 ✭✭✭spideog7


    I'm not 100% on the ins and outs but I've looked into it for myself.

    You can cash out your 401K but you will pay income tax and a pretty hefty penalty on it (10% I believe). You can leave it there until your 59 1/2 and then you can cash it out in limited amounts (it won't go anywhere even if you leave the US, you'll still own it, although I'm not sure how you'll be taxed on it when you do withdraw it if you're no longer living in the US). I don't believe you can roll it into an Irish pension fund as it's tax deferred in the US. If your employer matches what you put in then you still might be better off opening one, even with paying income tax on it and the 10% penalty.

    Another option if it's available to you would be to look at a ROTH 401K (that is an after tax 401K), there will still be restrictions on it but you won't be liable for tax or penalty on what you've put in. Any match made by your employer or earnings on it will still be tax deffered so early withdrawal will be taxed and penalised.

    I'm in kind of the same position so I've chosen not to open one (also the tax defferment nature of it is hardly beneficial given the tax bracket I'm in) on top of that my company doesn't match so nothing to gain there.


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