Aussie in US, implications on 401k and IRA when going home

[joshuamsm]

Hi all,

New here, awesome site, I love it
Takes some time to wrap my head around all the different terminology and acronyms as we are from Australia.

Im just wondering if anyone has any knowledge or advice in regards to 401k and IRA if/when we move back to Australia

My wife is the physician and is in the first 8 months of her residency, and we probably plan to be here for 8-10 years before going back home.
So there will be around 4-6 years of good income, i'm just wondering if we should focus on maxing 401k and IRA.

Any help or directions would be great

Thanks

[jfoxcpacfp]

Welcome, matey!

Residency is a great time to contribute to a Roth IRA (unless your joint income is in a high tax bracket) and I would encourage you to look into that, whether a personal Roth or through work if that option is offered. However, you do need to have an understanding of how the Roth would be treated in Australia upon distribution.

For a traditional 401k, my understanding is that you would pay tax in the country of residence at the time of distribution. If American Roth IRAs are not recognized in Australia, however, you might owe tax on the growth. A quick Google search hasn't turned up much of value, I'm afraid. Recommended you consult with a CPA who works in international taxation and/or read up on the tax treaty between the US and Australia.

[joshuamsm]

Hey Johanna,

Thank you, yeah i have been googling away trying to find some information and it is very scarce and the little I do find isnt very specific.

I did see something that said you cant hold a 401k if you live out of the US ( if we move back home ) because we arent US citizens.

I shall look into a CPA for internationals and see what they know

[jfoxcpacfp]

joshuamsm wrote:

I did see something that said you cant hold a 401k if you live out of the US ( if we move back home ) because we arent US citizens.

Click to expand...

I don't think this is correct. You may be able to hold onto the 401k or roll it over to an IRA roll the IRA into a similar account in Australia. See "The Bottom Line" in this piece. Not exactly an IRS reg, but I'm sure I have found similar information on other sites, too.

[joshuamsm]

Thank you, that is good to know.