Rollover to a foreign country

I have a participant in the plan who has moved back to Italy--he was a resident alien while he was in the USA. He wants to roll his money over to an IRA (or the equivalent) in Italy, or take a lump sum distribution.  How would the tax withholding work if he took a cash distribution?  He has been gone for a couple of years now.

Thank you!

You need to check what the treaty with Italy says with regard to withholding. Looks like it is 15%.

https://home.kpmg.com/content/dam/kpmg/ca/pdf/2018/01/non-resident-withholding-tax-rates-for-treaty-countries.pdf

https://www.irs.gov/pub/irs-utl/Tax_Treaty_Table_1.pdf

https://www.irs.gov/businesses/international-businesses/italy-tax-treaty-documents

14 hours ago, Larry Starr said:

You need to check what the treaty with Italy says with regard to withholding. Looks like it is 15%.

https://home.kpmg.com/content/dam/kpmg/ca/pdf/2018/01/non-resident-withholding-tax-rates-for-treaty-countries.pdf

https://www.irs.gov/pub/irs-utl/Tax_Treaty_Table_1.pdf

https://www.irs.gov/businesses/international-businesses/italy-tax-treaty-documents

 

Thanks Larry! I was doing some Googling and couldn't find anything definitive on it.

You also need to look into form W8-BEN this person most likely needs to complete that form. If this person isn't a citizen and the payment is going outside the US as far as I can tell they need to complete this form. 

So Google W8-BEN form and instructions.  

I work with a bank that makes me get a bunch of information for a 1042S which they issue in these cases instead of a 1099-R.   I am NOT an expert on this form.  I am doing what management and the bank tell  me to do for the 2-4 payments clients I help make outside the US a year. 

So Google 1042S form and instructions also. 

1 hour ago, ESOP Guy said:

You also need to look into form W8-BEN this person most likely needs to complete that form. If this person isn't a citizen and the payment is going outside the US as far as I can tell they need to complete this form. 

So Google W8-BEN form and instructions.  

I work with a bank that makes me get a bunch of information for a 1042S which they issue in these cases instead of a 1099-R.   I am NOT an expert on this form.  I am doing what management and the bank tell  me to do for the 2-4 payments clients I help make outside the US a year. 

So Google 1042S form and instructions also. 

 

Thanks ESOP guy -- I do have the W8-BEN

Also, this would not be a rollover, as US retirement accounts can be rolled over only to other US retirement accounts. On the US side, this would be just a regular distribution.

6 hours ago, Appleby said:

Also, this would not be a rollover, as US retirement accounts can be rolled over only to other US retirement accounts. On the US side, this would be just a regular distribution.

The question was not about a rollover; see original post:

"How would the tax withholding work if he took a cash distribution?"

That was the question that was answered.

On 9/24/2018 at 10:38 PM, Larry Starr said:

The question was not about a rollover; see original post:

"How would the tax withholding work if he took a cash distribution?"

That was the question that was answered.

 

 

But it was- in part. It says in part "

Quote

I have a participant in the plan who has moved back to Italy--he was a resident alien while he was in the USA. He wants to roll his money over to an IRA (or the equivalent) in Italy, or take a lump sum distribution.  How would the tax withholding work if he took a cash distribution?  He has been gone for a couple of years now.

See bolded text. 

On 9/28/2018 at 2:36 PM, Appleby said:

But it was- in part. It says in part "

See bolded text. 

 

Yes, he did say that, but the question asked was the next sentence (notice the question mark).  Not a problem, just noting that the question dealt with was one of withholding on a cash distribution to a foreign national.