How are 401k withdrawals taxed in puerto rico

The tax treatment of 401 (k) distributions depends on the type of plan: traditional or Roth. Traditional 401 (k) withdrawals are taxed at an individual’s current income tax rate. 2 …

The stickler is with Roth 401k/IRA. Even though you paid federal and state taxes in a Roth and are considered "tax free" in the US when withdrawn, they are not tax free in Puerto Rico, you have to pay Puerto Rico taxes from your Roth withdrawals which can be sizable being that you do not get the tax credit. This is what we discovered.

I withdrew funds from a 401k in Puerto Rico. They held …

Official Site: https://ttlc.intuit.com/community/retirement/discussion/i-withdrew-funds-from-a-401k-in-puerto-rico-they-held-20-of-the-funds-do-i-need-to-report-the/00/160823

In January you will receive a 1099R, which you must enter on your 2017 tax return to report the retirement fund distribution. The 20% that was withheld was an estimate of tax you may owe. If you withdrew the money before you were 59 1/2 there will also be an early withdrawal penalty of 10%. On your 2017 return-To enter your retirement income, Go to Federal> Wages and …

Background on Puerto Rico’s Interactions with the USA • US Territory since 1898 (Spanish-American War) • Persons legally born in Puerto Rico ARE U.S. citizens (since 1917) • Puerto Rico has its own tax code (currently the PR Internal Revenue Code of 2011, as amended, or the “PR Code”) modeled after the U.S. Internal Revenue Code of 1939

People Also Ask how are 401k withdrawals taxed in puerto rico

Do I have to pay Puerto Rico taxes on Roth 401k/ira withdrawals?

The stickler is with Roth 401k/IRA. Even though you paid federal and state taxes in a Roth and are considered "tax free" in the US when withdrawn, they are not tax free in Puerto Rico, you have to pay Puerto Rico taxes from your Roth withdrawals which can be sizable being that you do not get the tax credit. This is what we discovered.

Can I withdraw money from my tax deferred accounts in Puerto Rico?

If you withdraw money from your tax deferred accounts while living in Puerto Rico, you have to pay Federal and Puerto Rico taxes. You do get a credit in Puerto Rico for taxes paid to the Federal Government and at the end you pay the highest of both, which may or may not be higher than what you pay in state and federal in a given US state.

Should I fund a Puerto Rican IRA?

Assuming that your investments are covered by Act 22 and that your business is covered by Act 20, there would be little current advantage in funding a Puerto Rican IRA. We see no advantage to pouring your US IRA into a Puerto Rican IRA.

How are 401 (k) withdrawals taxed?

Traditional 401 (k) withdrawals are taxed at an individual’s current income tax rate. In general, Roth 401 (k) withdrawals are not taxable provided the account was opened at least five years ago and the account owner is age 59½ or older.

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