Foreign Nationals - Non-resident

[Guest rgorman]

Two companies merging and as a result one plan is terminating. The terminating plan has former employees that were foreign nationals nonresident that have since returned to Italy.

They do not want to take their assets from the terminating plan due to tax issues.

Can the plan transfer the funds from the terminating plan into the other plan? Could they set up IRAs if there is not a QJSA option? Can they purchase an annuity if there is a QJSA?

This is the first company we have worked with that will have employees shared between the US and a foreign country.

[Guest mjb]

1. have you checked to see if there is a tax treaty between the US and Italy that covers taxation of citizens of each country?

2. How can an IRA/annuity for non resident aliens be set up to comply with US law, e.g. Patriot act, etc?

3. who would decide how to invest the IRA funds?

4. Why is so important that the benefits not be paid to the participants?

If you transfer the funds to another plan arent you just postponing the day when the benefits will have to be distributed with attendent taxation? Under US law there is automatic 30% withholding on the payments.

[Guest rgorman]

We would like to distribute the funds to them but they do not want to take them and their accounts are over $5,000.

[Guest mjb]

If you are unwilling to distribute the funds what choice do you have other than to transfer the funds to the new plan.

But two Q.

1. Will you have to obtain any identification required under US law if the accounts are transferred to the new plan?

2. Are the participants aware that if distribution is delayed to a later date the taxes due will be greater than the are now.