Cincinnati55

Given current (and possible future) exchange rate considering cashing 401K with current value $250K approx. Formally surrendered Green card July 2018 and did final tax returns for 2018 and have made IRS payment / received State refund. If I withdraw I'm aware of the 10% penalty and also provider likely to keep 25%+ for tax but any other consideration. Just feel the 10% penalty, if that is only difference, may be worth occurring as nearly 10 years until I'm 59 1/2 and exchange rate by Q4 this year may be very attractive. Any advice welcomed.

durham_lad

It may well be worth the gamble, but it is a gamble on exchange rates.

djsoul

I have been doing some extensive research on this topic as I have a 401k also.

You should seriously consider leaving your 401k where it is or rollover (tax free) to an IRA; you can then file a form W8-BEN with your plan administrator to certify yourself as a Non-Resident Alien living in the UK. You should NOT be subject to a 30% IRS tax withholding under normal circumstances. Leave it until you are 59.5 to avoid the 10% penalty - withdrawals should then be also tax free under the UK/US tax treaty; please get professional advice though or speak with the IRS directly.

I don't think you will be able to make contributions but at a rough 7% growth rate your $250k would be worth $495k after 10 years.

MidAtlantic

There have been reports here that some plan administrators do not comply with the W8-BEN and still deduct tax. You then have to complete an IRS tax return in order to claim back the tax. That's probably something the OP doesn't want to do, given that he has disconnected from the IRS.

For those in the US, planning on returning to the UK, it is worth asking the administrator their policy on this. If they insist on deducting tax then it may be worth transferring the funds to one that does not. It is virtually impossible to do that when you are no longer resident.

Cincinnati55