TPAMan Posted October 20, 2015 Posted October 20, 2015 Typically when we do distributions out of the country we withhold at 30%. Question came up for a participant with a ROTH balance. I am thinking that this would be exempt form the mandatory 30% withholding, but am not having any luck finding a cite. I am tempted to forgo the withholding as taxes have already been paid, but would feel better if I knew the IRS was on board as well. Any thoughts!=?
Lou S. Posted October 20, 2015 Posted October 20, 2015 The portion that is tax free recovery of basis or qualified distribution is not subject to income withholding.
ESOP Guy Posted October 20, 2015 Posted October 20, 2015 You may know this but if the person is being paid in a tax treaty country and completes a W8-Ben the withholding rate would be well below 30% in many cases. I also believe the 30% rate only applies to non-US citizens being paid outside the US. If I recall correctly a US citizen outside the US would still be 20%. See page 24 https://www.irs.gov/pub/irs-pdf/p15a.pdf It guides you to more details.
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