401K Rollover, Living in Canada

L1: 401K Rollover, Living in CanadaHello,
I am planning to rollover my 401K next month (January 2007). I just turned 54 this month, am disabled and was told therefore no penalties. However, Iam now a permanent residentin Canada and I know there are offsetting foreign tax credits, etc on the income tax aspect of the distributions, but I was told I need a US address. Is this true? If so, I might use a relative”s address if I have to. ANd if so, am I subject to that state”s income taxes in addition to federal taxes?
Any help is most appreciated.

2006-12-27 13:32, By: safford, IP: [64.12.116.204]

L2: 401K Rollover, Living in CanadaI don”t follow international tax issues, but I think you may have misunderstood that advice. For your IRA, you definitely need a US based IRA custodian, as both the 401k and the IRA must be established and maintained under the US Tax Code. But I don”t think your personal address needs to be in the US to get distributions etc. That would eliminate the state issue, but there would be no state or federal income tax on a proper rollover anyway. It should be done by direct trustee transfer to avoid 20% withholding.
Distributions will be subject to US tax when you take them from the IRA, but no state tax. The tax treaties between the two countries will dictate how much if any credit you get against any Canadian tax due on the distributions. Again, this is just my impression, but something you can check out. Banks or brokerages near the border should run into this issue as well as tax prep firms in those areas that could clarify the tax aspects of your Canadian residency.2006-12-28 08:54, By: Alan S., IP: [24.116.66.98]