401(k) retirement plans are a very good alternative to Social Security in the United States. And not only that, but they are also a good complement to the usual retirement. So every day more and more United States citizens decide to create their pensioner plan through 401(k) or similar. However, sometimes we have the need to take money from these pensioner plans.
Unlike Social Security checks, 401(k) money is available to citizens who are making one of these pension plans. But taking the money early will have a penalty. Likewise, doing it overseas could also mean something not very welcome for everyone. Anyway, it is true that sometimes we have no choice but to do this kind of actions.
If you are thinking of traveling abroad and have a 401(k) account from which you could withdraw money, you’ll want to know all the facts. The more you know about the retirement plan, the better. So pay attention to whether you can withdraw money from this account once you’re abroad. Do you already have a vacation planned?
PENALTIES FOR WITHDRAWING MONEY FROM A 401(K) ABROAD
Citizens who have a 401(k) know perfectly well what the limits are when it comes to withdrawing money from this plan. That is, retirement for this type of plan begins at age 59 and a half. This means something very simple: every time we take money out of this account before that age we are going to have to pay a penalty.
Well, this also applies if we are abroad, regardless of the country. And the fact is that the taxes for this retirement plan are paid within the territory of the United States. So if you are abroad, you are under the age of 59 and a half and you want to take money out of your 401(k), you are going to have to pay taxes.
On the other hand, if you are over 59 and a half years old, you will not have to pay extra taxes, unless the bank decides so. Each bank has its own rules related to taking money out of the country. So you already know that you will have to pay taxes, commissions or penalties depending on your situation.
The general advice for this type of situation is to try not to take money out of the 401(k) unless it is strictly necessary. This can be a real disadvantage in every way. For that reason it’s better not to do it and save money in a different way.