Perathu Manivannan asked on 16/11/2020

I am contributing to a retirement account (Roth IRA) in the US. When I decide to go back before the age of retirement, how to take the money back to India? How will it be taxed in India?

answered on 16/11/2020

A Roth IRA is funded by your post-tax income. Therefore, withdrawals are tax and penalty-free.


However, if you have had your Roth IRA for less than 5 years or you haven’t reached the retirement age of 59 and a half, the earnings can’t be withdrawn. If you withdrawal your earnings before maturity then tax will be applicable in the US at the prevailing rate along with 10% penalty charges.


Remember, the contributions aren’t taxable. Only the earnings are taxable/liable for penalty depending on the nature and time of withdrawals.


Now, since you have already paid the taxes, if any, that were applicable on your Roth IRA. It won’t be taxed in India.


Click on the button below to connect with our taxation expert who will guide you through the basic processes and create a customized plan for you in order to save maximum taxes on your earnings.


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