Retiring In Canada

[ShokWaveRider]

Thanks. Do you know if you take the 72(t) option from another country if there is still the 10% penalty?

 

[Hyperborea]

Thanks.  Do you know if you take the 72(t) option from another country if there is still the 10% penalty?

The 72(t) (SEPP) rules don't care about country of residence.  The 10% penalty if you're under 59.5 rule also doesn't care about country of residency. If you do have a different country of tax residence than when you set up the IRA you will need to file a W-8BEN with the IRA provider so that they will withhold the correct amount.

I'm planning on just straight withdrawing the entire amount and taking the 10% hit due to a couple of factors - young age at retirement (mid-40's), variable tax residency, escape from changing US tax policy, 0% tax rate other than the penalty.  The last one is a big concern - how long can such a good opportunity last given the focus of the G7 countries on pushing low tax countries to raise their rates? As well, even after I withdraw the money I should be able to let it grow without taxes for a number of years due to various legal means.

You have stated that you are a US citizen though.  That makes you forever subject to US taxes despite the tax treaties.  In other words becoming a Thai tax resident (or a tax resident of anywhere else) won't stop you from paying US tax on your IRA withdrawals.  If there's a tax treaty it will only prevent you from being double taxed. That means that the country of closer ties (i.e Thailand if living in Thailand) would get a first kick at taxing the income and then the US would tax it but allow a credit for the foreign taxes paid.

Hyperborea

 

[ShokWaveRider]

The 72(t) (SEPP) rules don't care about country of residence. It's just a simple 10% penalty if you're under 59.5. I'm planning on just straight withdrawing the entire amount and taking the 10% hit due to a couple of factors - young age at retirement (mid-40's), variable tax residency, escape from changing US tax policy, 0% tax rate other than the penalty. The last one is a big concern - how long can such a good opportunity last given the focus of the G7 countries on pushing low tax countries to raise their rates?

You have stated that you are a US citizen though. That makes you forever subject to US taxes despite the tax treaties. In other words becoming a Thai tax resident (or a tax resident of anywhere else) won't stop you from paying US tax on your IRA withdrawals. If there's a tax treaty it will only prevent you from being double taxed.

Hyperborea

I think I am begining to Understand. For Myself though. There is a 15% US tax on Retirement funds from the 401k's in Canada. There is a double taxation treaty in place though.

I do have an address in Florida for US purposes that I send all Bank and Interest statements to. So At least no State tax. Although I will be filing in Canada as a Canadian Resident. So I assume (Pub 54) I will be paying Canadian Incomtax Minus US withholdings/tax on all the income.

I will satisfy the 330 days out of the USA part. As far as other items I will be sure to need some tax advice next year. I have no earned income only interest at the moment. And the 401ks which I have not begun withdrawing on. I will most likely take the SEPP payments options sooner or later.

I am simply living on my investment income from CD's right now. So it is a lot less than the $80k exemption.

SWR.

 

[Hyperborea]

I think I am begining to Understand.

I will suggest that you have a look at the web boards at http://grasmick.com/board/ This is a pair of discussion boards that run off an immigration lawyer's website. There are two boards one on immigration/visa concerns and the other on financial/tax issues. Since the lawyer is based in Buffalo and specializes in Canadian issues that is the focus of the boards. There are a lot of knowlegable folks there (i.e. helping each other do what we've already done) and occasional replies from the experts.

Hyperborea