Has anyone liquidated their 401k before retirement age? I know about the 10% penalty in addition to taxes that year, but are there any other gotchas? How hard is the process? Will I need lawyers? How much time it takes? (Not sure if I’ll be in the US in 10 years)
Roth ladder if you are FIRE
Even if you leave the US you don’t need to liquidate your 401k. Keep it in the US and let it grow until you retire. (Unless the country you’re moving to has a bad tax treaty with the US)
I think some countries consider the dividends and gains in US retirement plans to be "income" for their country's residents, negating the entire concept of tax-advantaged retirement.
Hence my last paragraph. Many (most?) countries have tax treaties with the US giving tax-free status to this kind of income however.
It's easy to liquidate. Just sell everything and fill out the plans paperwork to withdrawal it all. Some plans won't let you do that if you're still employed at the company whose plan it is.
I did it. No other gotchas. Since it’s a retirement account fidelity rep will talk about penalty and taxes as you mentioned. And then transfer / invest liquid money. Tip : Make sure you put in appropriate withholding ( 40%) while withdrawing . I barely escaped my tax non payment penalty because of this
I’ve converted to self directed ira to invest in alt asset classes