>
Date: Tue, 05 Jun 2001 21:28:34 -0700
alexandre,
my understanding is... (even though I work at Charles Schwab, I am not 100%
sure...) that you need to roll-over the 401k amount into an 'rollover IRA'
account (there is also a normal/traditional 'IRA' account... which makes
things a little confusing). that's similar to a 'vorsorge konto 3A' in
switzerland; basically, you can not withdraw money until you retire.
olivier might be right about amounts <$5,000. but if you decide to withdraw
early (you can always do that, btw!), then you need to pay the tax that you
saved when you paid in (no free lunch here...), PLUS a penalty tax of 10%!!
so don't withdraw early unless you have a serious cashflow problem... and
certainly there is NOT an obligation (that would be foreigner
discrimination)!
also, what's pretty cool (and different from a 'vorsorgekonto 3A) you are
completely free to go crazy at the stock market; no restrictions... i.e. you
could invest 100% in some crazy start-up company!
when you rollover your 401k account you need to open a 'Rollover IRA' at a
brokerage company... of course I could recommend Charles Schwab. and of
course there is a fee ($40/year)... UNLESS you have >$10,000.
please keep me posted about other feedback you get... (I also have a 401k
and will go back to switzerland some day).
Stephen
here some information on 'Rollover IRA' accounts (from www.schwab.com):
If you've received a payout from an employer-sponsored retirement plan, you
can continue to take advantage of the tax-deferred status of your funds with
a Schwab Rollover IRA. With Schwab you can take advantage of the wide range
of investments offered and have more control over your account than you may
have in your previous employer-sponsored plan.
Enjoy the powerful combination of tax deferral and compounded interest,
avoid penalties and taxes, plus get all the benefits of investing at Schwab:
Low commissions and fees, Income on your cash balances, Your choice of
investments, including stocks, bonds, mutual funds and more
Details: Rollover IRA
Minimum to Open $1,000
-----------------------------------------------------------------
Rollover
Deadline
There is generally no deadline for a direct rollover. This is the most
efficient way to maintain the tax-deferred status of your 401(k) or other
retirement plan distribution. Open your Schwab Rollover IRA and tell your
Benefits Administrator you want to directly roll your distribution over to
your rollover IRA account at Schwab.
However, if your employer issues you a check for the distribution, you must
deposit it into an IRA or other qualified plan within 60 days of its issuing
date in order to avoid taxation and penalties.
Tax Advantages
Contributions Tax-deductible (subject to certain limitations)
-----------------------------------------------------------------
Earnings Tax-deferred (not taxed until you begin withdrawing after
retirement)
-----------------------------------------------------------------
Withdrawals Taxable (except withdrawals of non-deductible contributions)
Contributions
Who's Eligible
Anyone who is under age 70 1/2 and is leaving a job or has just retired and
wants to preserve the tax-defered status of funds distributed from an
employer-sponsored retirement plan may establish a Rollover IRA.
-----------------------------------------------------------------
Opening Contribution Usually funded with eligible rollover distributions
from an employer-sponsored retirement plan.
You may combine your rollover with a traditional IRA or create a separate
rollover IRA account for the rollover. The benefit of a separate IRA is that
it allows you to move your rollover IRA into another employer-sponsored plan
should you decide to do so at a later time.
-----------------------------------------------------------------
Additional Contribution Amounts
You may make additional cash contributions to your rollover IRA or rollover
funds from an existing IRA, 401(k) or 403(b) plan. However, once you
co-mingle other funds with your rollover IRA, you will no longer be able to
roll the account into another employer-sponsored plan.
Withdrawals
Penalty-Free Withdrawals after age 59 1/2.
-----------------------------------------------------------------
Penalty
If you do not start Required Minimum Distribution (RMD) withdrawals by 70
1/2 you will face a penalty. Special distribution rules may apply.
Withdrawals before age 59 1/2 are subject to a 10% penalty. (Exceptions are
listed below).
-----------------------------------------------------------------
Exceptions to Penalty
Higher education expenses for you, spouse, children, or grandchildren.
Expenses include tuition, fees, books, supplies and room and board (must be
enrolled at least part time).
First-time home purchase expenses (up to $10,000) to buy, build or rebuild a
first home for you, your parents, children or grand children
Death or disability
Certain medical expenses including qualifying health insurance costs for
certain unemployed individuals and unreimbursed expenses exceeding 7.5% of
AGI.
Withdrawals made in equal installments over the account holder's life
expectancy.
Account Maintenance Fees
Fees Account balance (your combined Schwab IRA balances on or before each
September 15) Annual Fee
-----------------------------------------------------------------
$10,000 and above NO FEE*
-----------------------------------------------------------------
Below $10,000 $40
OR, fees waived for the year if:
Combined Schwab account balances in your household total over $50,000
Deposit or invest $250 per month with Schwab's MoneyLinkŪ service, Automatic
Investment Plan (AIP)** or direct deposit, to any one of your household's
Schwab accounts.
4 or more commissionable trades made by someone in your household in the
last 12 months.
>From: Olivier Coquoz <olivier_coquoz_at_yahoo.com>
>To: Alexandre Pauchard <Alexandre_Pauchard_at_novacrystals.com>,
>"'swiss-list_at_swiss-list.com'" <swiss-list_at_swiss-list.com>
>Subject: Re: swiss-list: 401K - transfer US to CH
>Date: Tue, 5 Jun 2001 17:55:43 -0700 (PDT)
>
>My understanding is if the total amount of money
>accumulated in your 401k plan is above $5,000, you
>have the option to leave it or not.
>Below $5,000 they give you the money back right away
>when you stop working in the US.
>
>I am not sure these rules are general, they might be
>depending upon who you have your 401k plan with.
>
>I hope this helps,
>
>Olivier
>
>--- Alexandre Pauchard
><Alexandre_Pauchard_at_novacrystals.com> wrote:
> > Dear Swiss-listers,
> >
> > Does anyone know the answer to the following
> > question:
> >
> > You enroll in a 401K program, stay in the US for x
> > years, and then go back
> > to Europe. Can you leave the contributed amount in a
> > 401K program until your
> > retirement age, and then have this amount
> > transferred on a US or Swiss bank
> > account ? Or do you have the obligation to withdraw
> > the money when you leave
> > the US (well, what's left after tax and penalty
> > deductions...) ? And what
> > about IRA's ?
> >
> > Thanks for any useful information on that matter,
> >
> > Alexandre Pauchard,
> > Nova Crystals, Inc.
> > San Jose, CA
>
>
>=====
>"If you think you have a new idea, it is either old or wrong or both."
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Received on Wed Jun 06 2001 - 04:33:44 PDT
