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Early Retirement Fund Withdrawals for Expats as Explained by US Global Tax (AUS)

US Global Tax are a globally focused, high-tech professional US and cross border tax 

services provider, with offices in New Zealand and Australia, and this month they explain early retirement fund withdrawals for expats. 


Among the recent benefits offered by the US Government and IRS due to Covid-19, many were overshadowed by the Economic Stimulus payment. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) included other provisions to assist those facing financial hardship as a result of Covid-19, one such being easier early withdrawals from US based retirement funds. 


Specifically, for those directly affected by the virus, the 10% early withdrawal penalty on retirement funds such as an IRA, 401K, etc. This is a temporary change, whereby you may currently withdraw up to $100,000 USD from these funds, without facing the 10% early withdrawal penalty (if aged under 59½). The $100K limit is from all funds in which you may own, rather than $100k for each fund. 


In order to qualify for the early withdrawal, you must have either: 

A spouse or dependent diagnosed with Covid-19 

Experiencing a layoff, furlough, reduction in hours, or inability to work due to COVID-19 or lack of childcare because of COVID-19 

Been diagnosed with Covid-19 

In the case that you meet any of the above requirements, you will be eligible to make the early withdrawal. It is important to note however, that New Zealand and Australia both impose tax on foreign retirement funds in most cases, and no relief will be granted for local taxation. 


Whilst this provision under the CARES Act is now temporarily in place, the withdrawal itself will still be dependent on the retirement fund provider, who may impose restrictions. 


At US Global Tax, they deal with international tax issues daily, so if you have any questions or wish to discuss, you can call them today on +64 9 373 2949 or +61 2 9211 7130, and for more information on tax returns Australia, US taxation and doing business in the US please go to https://usglobaltax.com.au .