Early pension withdrawals

Forum|Forum|8 months ago
September 26, 2025
1 reply
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Hi, I was a resident in 2023 and had 3 private pension schemes from my job. Moved back to my country, abandoned my green card and was a non resident for 2024. I withdrew my contributions, and all the companies took 20% of tax. I received 1099Rs. I know I need to pay a 10% penalty too. The contributions were my only income. I understand I need to file 1040NR, fill out line 5a and 16 etc.. But I want to make sure the income is not NEC? Im also filling schedule 2 for the penalty, and form 8840 as a non resident. I'm not reporting income from my home country as I already reported it here. Same with US bank interest that I believe I don't need to report as a non resident now. If someone can confirm my understanding I would appreciate it. Thank you

Not A Product Question

Best answer by Opus 17

In general, pension income is taxed according to where you worked when you (or the employer) made the contributions. Your pension is still "effectively connected" to the US and considered US taxable income, even if you are withdrawing the pension overseas. The pension plan must generally withhold 30% of any payout.

https://www.irs.gov/retirement-plans/plan-distributions-to-foreign-persons-require-withholding

To answer more specifically, you would need to tell us exactly what you mean by "private pension" -- company pension, IRA, 401k, etc. If your contributions were taxable, only the earnings should be taxed now, but if the company made contributions, they are almost certainly non-taxed at the time and fully taxable now. We also need to know what country you are a resident or citizen of, because there may be a tax treaty that will affect the answer. @pk12_2

O

Opus 17

Answer

Level 15

In general, pension income is taxed according to where you worked when you (or the employer) made the contributions. Your pension is still "effectively connected" to the US and considered US taxable income, even if you are withdrawing the pension overseas. The pension plan must generally withhold 30% of any payout.

https://www.irs.gov/retirement-plans/plan-distributions-to-foreign-persons-require-withholding

To answer more specifically, you would need to tell us exactly what you mean by "private pension" -- company pension, IRA, 401k, etc. If your contributions were taxable, only the earnings should be taxed now, but if the company made contributions, they are almost certainly non-taxed at the time and fully taxable now. We also need to know what country you are a resident or citizen of, because there may be a tax treaty that will affect the answer. @pk12_2

J

JaptrupuszAuthor

Level 2

Hello, thank you for your reply. My contributions were withdrawn from Nationwide, Missionsquare and FRS (Florida Retirement System) plans. The 20% tax has been automatically taken. The plans were offered to me with the employment in Miami Dade County -Parks and Recreation. As I mentioned in 2023 I was a resident, but withdrew the contributions in 2024 as a non-resident. I found on IRS website that distributions from pensions or retirement plans that were earned while I was employed in the US are ECI, because are attributable to my US service after 1986? And to figure out the tax I need to use tax tables. I live in Poland now. Thank you for your input!