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Financial Products

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Posts: 1
Registered: ‎09-14-2017

401k Non resident UK Citizen

Hello all,


I find myself in a peculiar situation and would like to establish where I stand, or where I should head for more detailed advice.


I have worked for a US organization since 2007. Other than two periods in the US (amounting to around 32 months during which I paid Fed and State taxes), I have been employed overseas from my UK residence. I have not had taxes withheld while being out of the US, but I have been allowed to continue paying into the employer's 401K. My employer has no UK presence.


As I understand things, my 'pay' is therefore non US source income as I perform my services fully from my UK home base and I'm not required to file any form of tax return (I pay UK tax instead). Where does that leave me when or if I need to access the 401K funds which I continue to contribute and keep on growing?


I already understand about withholding, lump sums, periodic payments etc. Is that what I should expect to face if and when I need to withdraw the funds - or, should I even be contributing at all under these circumstances?


Should I continue to contribute with the expectation it will therefore be taxed in the US at some point (lump sum withholding) or should I not be paying into the 401k at all? How can the IRS withhold taxes from money which isn't taxable in the US?


Utterly confused at present!