IRA, 401(k),

The trouble with retirement is that you never get a day off.

Abe Lemons

Think Again Before:

  1. Withdrawing your  IRA, 401(K)
  2. Rolling Over your US Pension
  3. Cashing out your Superannuation

If you fail to tax plan, you are planning to pay a lot of tax both in the United States & Australia.

Income Tax Treatment of IRA Distributions

US Tax Treatment

A person can make a withdrawal from their individual retirement account (Roth IRA) at any time. Qualified distributions from Roth IRAs are not subject to income tax. However, distributions from other IRAs will be included in income and taxed as ordinary income. They may also be subject to a 10% early distribution penalty. This will depend on the age of the individual taking the IRA distribution and what they will be using the distribution for.

Generally, if a taxpayer takes distributions from a traditional IRA prior to age 59 years and six months, he or she will be subject to a 10% penalty.

Australian Tax Treatment

Is a US IRA, 401(k), Roth IRA Subject To Australian Tax?

The short answer is yes if you are a resident Australian taxpayer.

Rolling Over Your IRA

US Tax Treatment

An IRA can be rolled over to another eligible retirement account without such move being subject to income tax as long as the distribution is rolled over to the other account within 60 days.

Australian Tax Treatment

Australia is the home of the boomerangs. Even though the roll-over is not subject to tax in the US, it is subject to tax in Australia. Ouch!


US Tax Treatment

Australian superannuation is subject to US income tax. Furthermore, it is not covered in the US-Australian tax treaty as others may suggest. So, do not believe everything you hear.

Australian Tax Treatment

Australian superannuation is not subject to tax in Australia when it in the pension phase. However, it tax is paid in the life of the superannuation account. It is a good deal if you are just an Aussie. If you are US person, tax planning is a must.