SOURCE: US Tax Professionals

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September 24, 2015 18:10 ET

Vancouver US Tax Professionals Caution Against Early Plan Withdrawals

Vancouver US Tax Professionals Outline How Early Withdrawals From Retirement Plans Can Impact Dual Citizens in a Newly Published Article

VANCOUVER, BC--(Marketwired - September 24, 2015) - US Tax Professionals, a Vancouver based firm that specializes in taxation services for American and Canadian citizens, understand that it is sometimes imperative to make early withdrawals from retirement savings. However, dual citizens who withdraw money from these plans may be taxed heavily on their money. Read more at: http://www.us-taxprofessionals.com/newsletter.php

Generally, an early withdrawal means taking money from a plan before the age of 59 and a half. In order to make the best decisions and reduce taxes, the article shares five points to consider.

1. If an additional withdrawal was made from the plan the previous year, the amount withdrawn must be reported to the IRS. There may be income tax as well as an additional 10 percent on the amount.

2. The additional 10 percent tax does not apply to nontaxable withdrawals. Nontaxable withdrawals include withdrawals of the cost to participate in the plan and contributions that were taxed before being added to the plan.

3. A rollover is a nontaxable withdrawal. Generally, a rollover is a distribution of cash or other assets from one retirement plan to another. You usually have 60 days to complete a rollover to make it tax-free.

4. There are many exceptions to the 10 percent tax, such as using the money for qualified higher education expenses or unreimbursed medical expenses in excess of 10 percent of adjusted gross income.

5. If an early withdrawal is made, it may be necessary to file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, with your yearly federal return.

The rules for taxation and retirement plans can be complex, particularly for dual citizens. To minimize expenses and ensure the right forms are filed, it's always advisable to consult with a knowledgeable tax professional, preferably one who's versed in the nuances of Canadian and American tax law.

About the Company

US Tax Professionals in Vancouver provide tax services for dual American and Canadian citizens. Founded in 2013, they specialize in taxation for US Citizens and expats, taxation and accounting for business, cross border taxation for US and Canadian citizens, and accounting and taxation of alternative investments, including private equity funds and hedge funds. For more information visit http://www.us-taxprofessionals.com/ or call 778-873-4812.

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