529 Plan Distribution Taxable Withholding Rate - Non Resident Alien

bluesi2004 · ‎July 20, 2022

If a nonresident alien living in Sweden with a 529 plan in the US redeems the account as a non qualified withdrawal, I am trying to determine whether the taxable portion of the withdrawal (the earnings) would be subject to the 30% NRA withholding rate? I was informally told that their is a tax treaty between the US and Sweden that may provide an exemption from NRA withholding but can’t figure out which section (If any) of the treaty would apply. Thanks.

Critter-3 · ‎July 21, 2022

If the person taking the distribution knows of a treaty tax exemption then have them provide the ruling to you ... why do you have to figure this out yourself.

If they cannot provide it then do the withholding and let them file a 1040NR return to get the excess withheld taxes back.

Hal_Al · ‎July 21, 2022

For treaty provisions, see: https://www.irs.gov/businesses/international-businesses/sweden-tax-treaty-documents

More relevant than the treaty is what will the plan administrator do. Typically, the plan owner has to tell the plan administrator whether the distribution is qualified or not. If non qualified, you are then asked if you want to withhold more than the standard amount.

529 Plan Distribution Taxable Withholding Rate - Non Resident Alien

Education

Education