My_question_is: Applicable to both US and Canada
Subject: 401k taxation
Expert: taxman at centa.com
Date: Thursday March 02, 2006
Time: 06:35 PM -0800
QUESTION:
I am a Canadian citizen working in the US with a TN visa (I-94). I have been
in the US for just over ten years and have re-applyed each year for the TN
visa. In these years I have maintained a US residence, established social
security benefits & paid US taxes. I have also contributed to a 401k
retirement fund through the company that I work for. My wife (US citizen)and
I are considering moving to Panama in the next year or so and are thinking
about what the ramifications are for withdrawing funds from my 401k fund to
live in Panama. Can the IRS tax the 401k funds that I withdraw if I become a
resident of Panama through the Pensionado program in Panama?
Thank you for a response to this question.
---------------------------------------------
david ingram replies:
Interesting, one of my best friends (who I see once every five years but you
get the idea) and a dual US / Canada citizen has also just moved to Panama
from Florida.
Panama does not have a tax treaty with the US and you are not living in
Canada which does.
The US withholding tax rate on your 401k paid to you in Panama will be 30%.
If you were living in Canada, the withholding rate would be 15% but then you
would owe more to Canada.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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