Attorneys for Tax-Free Extraction of U.S. Pensions

Generally, when you withdraw funds from a U.S.-based retirement fund – such as a 401(k), 403(b), Individual Retirement Accounts (IRAs), and even an executive Non-Qualified Deferred Compensation (NQDC) Plan – there’s a 20% withholding tax. In addition to that, if you’re under the age of 59 and six months at the time of the withdrawal, there’s an additional 10% early withdrawal penalty, which is designed to discourage people from withdrawing funds prior to retirement age. For nonresident non-U.S. citizens, there’s a gross-basis 30% withholding tax. In just about any scenario, you’d be looking at losing 30% (nearly one-third) to the IRS.

As long as you’re not a U.S. citizen, attorneys for tax-free extraction of U.S. pensions from Castro & Co. can get your effective income tax rate down to 0% in both the U.S. and your country of residence.

In the absence of planning, an individual will pay 30% tax to the U.S. Although your country of residence will likely grant you a tax credit for the 30% paid to the IRS, you could end up owing additional tax in your effective income tax rate in your country of residence is greater than 30%. For example, let’s say you’re an Australian tax resident with an effective Australian income tax rate of 35%. Although you would get credit for the 30% paid to the IRS, you may still owe an additional 5% to Australia without proper planning.