401 K options returning to the UK

[Guest DShergold]

I am a British National, I have been working in the US for seven years. I have a 401K. I am returning to the UK for good. What are my options with my 401K? Do I have to retain it in the US till I retire or can I cash it in now?

[Guest Benefits Maven]

You can cash it in now assuming the plan allows it, but if you are under age 59 1/2 you would pay the standard taxes and 10% penalty for the withdrawal. That same rule would apply to anyone, whether you were leaving the country or not. I don't believe there is any way to keep the funds tax protected without leaving them in a qualified plan (your 401(k)) or rolling them into an IRA in the U.S. Uncle Sam wants his share now or later and if the funds left the country without being taxed, there would be no way for the US to recoup the taxes.