Roth distributions when non-resident?

[Guest Dr.Frank]

I am Canadian who just left the US for another position in Canada. I am becoming a US non-resident at the end of 2003. I am probably paying US income tax for the last time for the year 2003, never to earn a dime again in the US.

I am considering making a one-time $3000 contribution to a Roth (for 2003) and leave it there until I reach the age of 60, so that it grows tax-free. Is it legal? What are the possible implications since I am likely never to file for US income tax again?

Frank

[Appleby]

IRA custodians are required to perform tax withholding according to your residency status (citizen/resident alien or non-resident alien).

If your status is indicated as a non-resident alien at the time the distribution occurs, then the custodian will withhold 10 percent for federal taxes from your distribution .You may waive this withholding, but will then become subject to the treaty rate. For Canada, the treaty rate is 15%. To elect out of the 10% withholding, you may need to provide the custodian with Form W-4P and Form W-8BEN, available at www.irs.gov

For more information, you may refer to IRS publication 515 and 519, also available at www.irs.gov