I understand, that she shouldn't be taxed on her contributions, our main concern is the income on those contributions. Let's say she contributed $70,000 of her money to her high yield retirement, employer sponsored account over past 40 years and received in 2019, $120,000 lump sum amount. Her income is $50,000, does she have to pay tax on whole $50,000 or only on income she made after 1999 when she became a US person for tax purposes. Another words, majority of contributions and income was made when she was a nonresident (when she worked in Japan before 1999). Thank you.
