IRA and Non-residents
I'm planning to open a traditional (pre-tax) IRA account with Vanguard. I'm a non-resident who might move back to my home country in next few years. 1. What are the tips for minimizing the taxes if I do a early withdrawal on reaching my home country? 2. For early withdrawal (IRA distributions) what will be the federal tax withholding rates (apart from 10% penalty) considering there won't be any ordinary income to me in US? Keep in mind that I'll already be paying taxes in my home country for these distributions. 3. How easily I can control/operate my IRA account from overseas?
Make sure it's Roth IRA as you can withdraw your original contribution without penalty, the penalty is only on withdrawing gains. With a traditional IRA the penalty will be on the whole amount. Google "backdoor Roth IRA" to see how to do this if you are over the income limit.
A traditional IRA has deduction limits based on income and whether your employer offers a retirement plan. The federal tax would be whatever your income would be from the withdrawal. Withdraw $100K, your income is $100K.
Thanks! And how much withholding there will be?
Best to ask the brokerage. I had seen a post by someone saying when he withdrew his 401K / IRA the brokerage withheld nothing, neither a tax nor a penalty