US 401K/Roth and retirement in Ireland

R

Returninghome

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Hi All,

Appreciate any advice on the following:

I (45M) moved to the US about 8 years ago and will move back home shortly. I have an Irish pension with Mercer from when I worked in Ireland (kept it with Mercer) and I have been paying annually into a 401K. I understand any disbursements from the 401K in retirement would be taxable, regardless of where I retire.

A Roth IRA (for anyone unaware, you invest net income and then the full account value (principal + growth) is tax free in retirement) is not available to me directly but I can do a Roth backdoor conversion (basically convert 401K in part or in full into a Roth account, pay income taxes now on the amount converted and then the Roth account value, including any growth achieved in the meantime, is tax free in retirement.). A combination of 401K and Roth IRA is popular in the US as each have advantages/disadvantages.

Question: how would Revenue treat Roth income in retirement if retired in Ireland?

Kind Regards,
Movinghome.
 
You will also have been paying SSN for 8 years, I believe in the US to be eligible for Social Security in retirement you need 10 years of contributions, that is something to look into.

I did a 401k rollover to a rollover IRA directly before leaving the US and thus did not have to pay early withdrawl charges. Do you get penalised for converting to a Roth? My idea is to let it grow until retirement age and then withdraw it all and bring it back to Ireland.

You need to find a specialist to find out whether this would fall under a tax treaty between Ireland and US and avoid double taxation.

The issue I see is that you are doing the backdoor roth as a US Tax resident but would be accessing the funds in future as an Irish tax resident and thus subject to our tax rules.
 
DublinHead54 said:
You will also have been paying SSN for 8 years, I believe in the US to be eligible for Social Security in retirement you need 10 years of contributions, that is something to look into.

I did a 401k rollover to a rollover IRA directly before leaving the US and thus did not have to pay early withdrawl charges. Do you get penalised for converting to a Roth? My idea is to let it grow until retirement age and then withdraw it all and bring it back to Ireland.

You need to find a specialist to find out whether this would fall under a tax treaty between Ireland and US and avoid double taxation.

The issue I see is that you are doing the backdoor roth as a US Tax resident but would be accessing the funds in future as an Irish tax resident and thus subject to our tax rules.
Click to expand...
Thanks Dublinead54. I wasn't aware of the SS 10 year minimum.

Re converting 401K to Roth I'm not aware of penalties other than paying the income taxes upon conversion. It may be an employer provided option so not available to everyone for some reason.

Re tax residence, I'm concerned about both sides of the coin really. US taxation (as I will likely be a US citizen, currently greencard, before moving home) of a tax-free lump sum upon retirement from my Irish pension and Irish taxation of a Roth distribution in retirement if I do that. Fun!
 
Did you find out any additional information regarding how a Roth IRA would be treated in Ireland?

I presume a 401k would be taxed at your marginal rate in the residing country i.e. Ireland?

Does anybody know how a HSA account would be treated if being used for medical expenses in Ireland pre/post retirement?

I am currently in the US with future plans to move back so interested in getting ahead of it and ensure I'm not going to far down any particular route.
 
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