Sorry, I guess I missed a key info - I am not a US citizen. So, for
income earned outside US, I do not owe US any tax. Could you confirm my
observation from the original post given this?

Thanks,
Vinay.

HW "Skip" Weldon wrote:
- quote -

On 20 Aug 2005 00:30:05 GMT, Rich Carreiro
<rlcarr[at]animato.arlington.ma.us> wrote:

- quote -

My understanding is that unlike IRA distributions, a 401k custodian
must withhold taxes from a 401k distribution. To get that withholding
refunded, the taxpayer would have to file a US return for that year
and at that point he/she would go through the mechanical process
described above.



-HW "Skip" Weldon
Columbia, SC

mydevnull[at]fastmail.fm writes:

- quote -

The US taxes its citizens on *worldwide income*, no matter where the
citizen lives. So it doesn't matter that the income isn't from a US
source. The US still taxes it as long as you are a citizen and
regardless of where you reside. The only way to get the US to stop
taxing your non-US income is to renounce your citizenship (though
ex-pats do get the special break of the foreign earned income tax
exclusion, whereby they can exclude from tax up to $80,000 of *earned
income*).

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

Hello,

I am trying to leverage 401K and IRAs towards maximal tax advantages.

Is my following understanding correct? Lets say a person leaves US, and
gets no income from any US source. This means that if she takes out
$15K or less a year from the 401K while outside US, the only US "tax"
is the 401K 10% penalty.

Further, can the 10% penalty be avoided by proving that a 401K loan is
being used for buying a house outside US or for higher education
outside US etc?

Any tips on this would be great!

Vinay.