For US expats residing in Australia, it will be important to consider the Australian and US tax treatment of withdrawing your US Retirement Plan, including a 401K, Traditional IRA or Roth IRA.
It is first important to note that a US Retirement Plan would normally not meet the definition of a ‘Foreign Superannuation Fund’ for Australian tax purposes.
Therefore, the starting point would be that a withdrawal of a US Retirement Plan would be subject to Australian tax.
Nevertheless, it’s crucial to keep in mind certain key aspects and explore tax strategies applicable in both the United States and Australia for lowering the combined tax burden when withdrawing funds from a US Retirement Plan.
Hence, it’s crucial to execute comprehensive tax planning that encompasses the tax consequences in both the United States and Australia while strategizing to optimize the overall tax burden in both nations.
Please get in touch with any questions.