Question about 401K and SSN

[piyu7444]

Everyone -

If this has been answered please do not get 'mad' at me for asking it again but I could not find 'straight' answer on the forum in any old threads.

1) Can one take out 401K by paying some kind of penalty? Scenario is if someone is going back to home country for good there is no use leaving 401K money here.

2) SSN taxes - When one gets the benefit of it. Every pay we pay 6.2% SSN + Medicare taxes. What is the treaty/rule/law for Indians? I heard from some people that if you work for 10 years in USA years you can take lump sum amount instead of waiting for retirement age.
Is that true? If not what are the options?

Please no hostile responses. If you can help me I would appreciate it but if you cant just ignore the thread.

Thank you!

[breddy2000]

Yes you can. But you need topay taxes on the Non-taxable income that you claimed while filing taxes and on top of it you need to pay 10% penalty. However it is not a good idea to take it out now as the 401(k) has lost huge % with recent market conditions, if you have invested in stocks. Also if you plan to live in US for longer duration, the 401(k) money can be used without tax or penalty if you plan to use the money to buy a house(First home)

2) SSN taxes - When one gets the benefit of it. Every pay we pay 6.2% SSN + Medicare taxes. What is the treaty/rule/law for Indians? I heard from some people that if you work for 10 years in USA years you can take lump sum amount instead of waiting for retirement age.
Is that true? If not what are the options?

Yes it is true. In order to claim the SS benefits, you need to work atleast 40 quarters which is 10 years. Not sure whether you can take money in lumpsum.

[gcdreamer05]

Originally Posted by piyu7444

Everyone -

If this has been answered please do not get 'mad' at me for asking it again but I could not find 'straight' answer on the forum in any old threads.

1) Can one take out 401K by paying some kind of penalty? Scenario is if someone is going back to home country for good there is no use leaving 401K money here.

2) SSN taxes - When one gets the benefit of it. Every pay we pay 6.2% SSN + Medicare taxes. What is the treaty/rule/law for Indians? I heard from some people that if you work for 10 years in USA years you can take lump sum amount instead of waiting for retirement age.
Is that true? If not what are the options?

Please no hostile responses. If you can help me I would appreciate it but if you cant just ignore the thread.

Thank you!

hi buddy dont take out the money from 401k, even if you were to go back to home country in our cases india, we can still get benefit , since india is in the list of countries which can receive a payment even if you left US. So that is like your PF money or pension money which you can still get sitting in india. so dont worry if you had to go back.

[piyu7444]

Originally Posted by breddy2000

Yes you can. But you need topay taxes on the Non-taxable income that you claimed while filing taxes and on top of it you need to pay 10% penalty. However it is not a good idea to take it out now as the 401(k) has lost huge % with recent market conditions, if you have invested in stocks. Also if you plan to live in US for longer duration, the 401(k) money can be used without tax or penalty if you plan to use the money to buy a house(First home)

2) SSN taxes - When one gets the benefit of it. Every pay we pay 6.2% SSN + Medicare taxes. What is the treaty/rule/law for Indians? I heard from some people that if you work for 10 years in USA years you can take lump sum amount instead of waiting for retirement age.
Is that true? If not what are the options?

Yes it is true. In order to claim the SS benefits, you need to work atleast 40 quarters which is 10 years. Not sure whether you can take money in lumpsum.

I am not leaving US but my brother in law will.......I just wanted to help him out with the answers.....
Thanks breddy2000

Can someone throw some light on taking SS tax in lump sum?

[piyu7444]

Originally Posted by gcdreamer05

hi buddy dont take out the money from 401k, even if you were to go back to home country in our cases india, we can still get benefit , since india is in the list of countries which can receive a payment even if you left US. So that is like your PF money or pension money which you can still get sitting in india. so dont worry if you had to go back.

Thanks gcdreamer05.

So at the age when we can get the SS back in the form of chqs. (In India or USA) does the invested money does not get impacted by the market?

[aachoo]

Originally Posted by piyu7444

Thanks gcdreamer05.

So at the age when we can get the SS back in the form of chqs. (In India or USA) does the invested money does not get impacted by the market?

The SS money is not like your 401K. It is not invested for you in your account. The SS money is being invested by the government (one hopes) in total so that they can pay everyone in total. It is a guaranteed amount (at the present) based on your age, number of years worked, financial situation etc. Govt can decide to change the SS benefits at any time with a legislative change. AFAIK no lump sum withdrawal is possible for the SS benefits. Some countries (India I dont think is one of them, Canada is) you can ask the SSA to allow you to get benefits from your local government agency- sort of have a lump sum payment from the SSA in the US to the appropriate agency in the other country.
-a

[longwait4gc]

Originally Posted by piyu7444

I am not leaving US but my brother in law will.......I just wanted to help him out with the answers.....
Thanks breddy2000

Can someone throw some light on taking SS tax in lump sum?

My understanding is once you leave US, you have to file tax return as Non Resident. That will be get taxed at 30% rate (after 4K standard deduction) + 10% penalty. So if you are not planning to come back then I dont think its a good idea to leave money in 401k.
Please ask your brother to talk to a tax consultant before leaving the money here.

[pkd666]

Not sure how it works. But as per this info on the SSA Website Citizens of india are eligible for SS payments if they have 40Qtr's work in the USA

http://www.socialsecurity.gov/pubs/10137.html

[number30]

Originally Posted by piyu7444

Everyone -

If this has been answered please do not get 'mad' at me for asking it again but I could not find 'straight' answer on the forum in any old threads.

1) Can one take out 401K by paying some kind of penalty? Scenario is if someone is going back to home country for good there is no use leaving 401K money here.

2) SSN taxes - When one gets the benefit of it. Every pay we pay 6.2% SSN + Medicare taxes. What is the treaty/rule/law for Indians? I heard from some people that if you work for 10 years in USA years you can take lump sum amount instead of waiting for retirement age.
Is that true? If not what are the options?

Please no hostile responses. If you can help me I would appreciate it but if you cant just ignore the thread.

Thank you!

Regarding 401K It depends upon his income level in India. What happens to if someone is in India his income level will lesser then the income over here. So automatically his tax bracket will go down. If he is US citizen he needs to file the tax return but he can take 85000 exemption from foreign earned income in US.

They have Make sure that 401K withdrawals are not considered as Income in India and Tax implication in India.

[piyu7444]

Originally Posted by number30

Regarding 401K It depends upon his income level in India. What happens to if someone is in India his income level will lesser then the income over here. So automatically his tax bracket will go down. If he is US citizen he needs to file the tax return but he can take 85000 exemption from foreign earned income in US.

They have Make sure that 401K withdrawals are not considered as Income in India and Tax implication in India.

Thanks to all who replied. I am thankful for your inputs

[Caliber]

Finance Gurus, need your inputs:

I now have 40 credits. In case some thing happens to our GC journey and have to return back, what is the procedure for SSN? Any idea?

[kshitijnt]

Originally Posted by Caliber

Finance Gurus, need your inputs:

I now have 40 credits. In case some thing happens to our GC journey and have to return back, what is the procedure for SSN? Any idea?

Contact them after the age of 60 or 65

[crazyghoda]

Another option could be to file a class action lawsuit demanding the return of the contributions made. I think people who have gone/are going back should seriously consider this option. The Govt should realize the cost of sending legal immigrants who have contributed to the system.

Originally Posted by Caliber

Finance Gurus, need your inputs:

I now have 40 credits. In case some thing happens to our GC journey and have to return back, what is the procedure for SSN? Any idea?

[Caliber]

Originally Posted by crazyghoda

Another option could be to file a class action lawsuit demanding the return of the contributions made. I think people who have gone/are going back should seriously consider this option. The Govt should realize the cost of sending legal immigrants who have contributed to the system.

I hope you are a finance professional.

This option is not possible if 485 is rejected as we will have just 15 days time to leave the country.

Request Law/Finance gurus to put their serious opinions.

[chi_shark]

dont know about #2, however, for #1, you can always terminate 401 k. you have to pay income taxes and a 10% penalty. i dont know what is the 10% penalty and the tax calculated on... i am guessing its just on the final amount that you withdraw... so if your final balance is 100,000 $, your tax will be whatever it is and 10,000 penalty paid to IRS.

Originally Posted by piyu7444

Everyone -

If this has been answered please do not get 'mad' at me for asking it again but I could not find 'straight' answer on the forum in any old threads.

1) Can one take out 401K by paying some kind of penalty? Scenario is if someone is going back to home country for good there is no use leaving 401K money here.

2) SSN taxes - When one gets the benefit of it. Every pay we pay 6.2% SSN + Medicare taxes. What is the treaty/rule/law for Indians? I heard from some people that if you work for 10 years in USA years you can take lump sum amount instead of waiting for retirement age.
Is that true? If not what are the options?

Please no hostile responses. If you can help me I would appreciate it but if you cant just ignore the thread.

Thank you!