Moving my US 401(k) to Sweden?

QUESTION:

HI,
I am Swedish citizen who lived and worked in the US for a few years on a H1-B visa. Now I live in France and would like to move my 401k out of the US and wonder if I have to pay taxes and penalties on it?

I do not want to take the money out, but I want to put it into another retirement plan in my home country, Sweden and wonder if I can find some legal help to do so.

Also, before I moved to the US, I was told I can roll over my social security contribution from US to Sweden when I leave the country, I don't know if you can help me with that too.

Really appreciate your help,
Best regards,

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david ingram replies:

Sorry, but I am not likely the person to ask.

You can NOT directly roll your 401(K) into a plan in Canda and Canada has the most liberal set of rules with the US of all the countries out there.

You can roll your 401 into an IRA and then Canada would allow the rollover of the IRA into a Canadian RRSP but to do that you still need to pay the tax to the US and the 10% penalty if you are under 59 1/2.

You end up getting the equivalent of the US tax back by claiming it as a foreign tax credit in Canada but i have no idea if Sweden or France has the same system. You will have to ask there. However, the method mentioned in Canada is not well known either so you will have to find out if it can be copied. Maybe 1 out of 100 financial advisors in Canada would have a clue how to do it. Fred Snyder at (604) 731-8900 and Dan Walkow at (604) 541-9952 or Darrel Thompson at (416) 874-8007 are three that do.

Provided you have six credits into the US Social Security, you will likely receive reduced benefits from both countries. Your working in France will further complicate the process but the following is taken from the US / Sweden Social security Totalization Agreement

ents

Retirement or old-age benefits
United States	Sweden*
Worker-Full benefit at full retirement age, or reduced benefit as early as age 62. Required work credits range from one and one-half to 10 years (10 years if 62 in 1991 or later).	Worker- Basic: Full pension at age 65, or reduced pension as early as age 60. Payable to Swedish residents with three years residence in Sweden or three years of ATP coverage. Payable outside Sweden to Swedish nationals with at least three years of ATP coverage. ATP: Full pension at age 65; reduced pension as early as age 60. At least three years of work required. Reduced payments with fewer than 30 years of work. No nationality or residence requirements.
Disability benefits
United States	Sweden*
Worker-Under full retirement age can get benefit if unable to do any substantial gainful work for at least a year. One and one-half to 10 years credit needed, depending on age at date of onset. Some recent work credits also needed unless worker is blind.	Worker- Basic: Must be age 16 to age 65 and at least 25 percent disabled. Payable to Swedish residents with three years residence in Sweden or three years of ATP coverage. Payable outside Sweden to nationals with at least three years of ATP coverage. ATP: Same as basic pension except three years work required. Reduced payments with fewer than 30 years of work.
Family benefits to dependents of retired or disabled people
United States	Sweden*
Spouse-Full benefit at full retirement age or at any age if caring for the worker's entitled child under age 16 (or disabled before age 22). Reduced benefit as early as age 62 if not caring for a child.	Spouse-No provision. However, a means-tested wife’s supplement to the basic pension may be payable for a wife who is at least age 60. Certain residence requirements may apply.
Divorced Spouse-Full benefit at full retirement age. Reduced benefit as early as age 62. Must be unmarried and have been married to worker for at least 10 years.	Divorced Spouse-No provision.
Children-If unmarried, up to age 18 (age 19 if in an elementary or secondary school full time) or any age if disabled before age 22.	Children-No provision.
Survivors benefits
United States	Sweden*
Widow-Full benefit at full retirement age or at any age if caring for the deceased's entitled child under age 16 (or disabled before age 22). Reduced benefit as early as age 60 (or age 50 if disabled) if not caring for child. Benefits may be continued if remarriage occurs after age 60 (or age 50 if disabled).	Widow-(worker died prior to 1/1/90 or widow born in 1944 or earlier)- Basic: Pension at any age if child under age 16 in care or at least age 36 and married at least five years. ATP: Pension at any age if worker was receiving ATP retirement or disability pension, or had at least three years of ATP coverage. Marriage must have lasted five years and taken place before worker reached age 60, unless there is a surviving child of the marriage.
Widower-Same as widow .	Widower-No provision.
Divorced widow-Same as widow if marriage lasted at least 10 years.	Divorced widow-Same as widow if worker died prior to 1/1/90. No provision if worker died 1/1/90 or later.
Divorced widower-Same as divorced widow.	Divorced widower-No provision.
Children-Same as for children of retired or disabled worker.	Children- Basic: Under age 18, or age 20 if student. Certain residence requirements may apply. ATP: Under age 18, age 20 if student. Deceased must have had at least three years ATP coverage. No nationality or residence requirements.
Lump-Sum Death Benefit-A one-time payment not to exceed $255 payable on the death of an insured worker.	Lump-Sum Death Payment-No provision.

*Sweden has a new pension system. People born in 1938 or later receive at least part of their benefits under this new system. People born in 1937 or earlier receive benefits only under the old system. This table shows the eligibility requirements for benefits only under the old system.

IV.A. How benefits can be paid

If you have Social Security credits in both the United States and Sweden, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country’s system, you will get a regular benefit from that country. If you don’t meet the basic requirements, the agreement may help you qualify for a benefit as explained below.

IV.A.1. Benefits from the U.S

If you do not have enough work credits under the U.S. system to qualify for regular benefits, you may be able to qualify for a partial benefit from the United States based on both U.S. and Swedish credits. However, to be eligible to have your Swedish credits counted, you must have earned at least six credits (generally one and one-half years of work) under the U.S. system. If you already have enough credits under the U.S. system to qualify for a benefit, the United States cannot count your Swedish credits.

IV.A.2. Benefits from Sweden

Sweden provides survivors and disability benefits two separate programs.

A “basic” pension program pays flat-rate benefits to Swedish residents with at least three years residence or three years ATP coverage. The pension normally is payable outside Sweden only to Swedish nationals with at least three years of ATP coverage. However, under the agreement, U.S. nationals residing outside Sweden can receive the basic pension on the same basis as Swedish nationals. In addition, U.S. credits can be counted to help meet the three-year ATP coverage requirement.
A “supplementary” pension program for workers, known by the initials “ATP,” pays benefits based on how long you worked and the amount you earned. To be eligible for an ATP pension, you must generally have at least three years of ATP credits. If you don’t meet this requirement, but have at least one year of ATP credits, U.S. credits may be counted to help you qualify.

IV.B. How credits get counted

You do not have to do anything to have your credits in one country counted by the other country. If we need to count your credits under the Swedish system to help you qualify for a U.S. benefit, we will get a copy of your Swedish record directly from Sweden when you apply for benefits. If Swedish authorities need to count your U.S. credits to help you qualify for a Swedish benefit, they will get a copy of your U.S. record directly from the Social Security Administration when you apply for the Swedish benefit.

Although each country may count your credits in the other country, your credits are not actually transferred from one country to the other. They remain on your record in the country where you earned them and also can be used to qualify for benefits there.

IV.C. Computation of U.S. benefit under the agreement

When a U.S. benefit becomes payable as a result of counting both U.S. and Swedish Social Security credits, an initial benefit is determined based on your U.S. earnings as if your entire career had been completed under the U.S. system. This initial benefit is then reduced to reflect the fact that Swedish credits helped to make the benefit payable. The amount of the reduction will depend on the number of U.S. credits: the more U.S. credits, the smaller the reduction; and the fewer U.S. credits, the larger the reduction.

Part V -- A Swedish ATP pension may affect your U.S. benefit

If you qualify for Social Security benefits from the United States based only on U.S. credits and an “ATP” pension from Sweden based only on Swedish ATP credits, the amount of your U.S. benefit may be reduced. This is a result of a provision in U.S. law that can affect the way your benefit is figured if you also receive a pension based on work that was not covered by U.S. Social Security. Receipt of a Swedish “basic” pension, which is based on residence in Sweden, won’t affect the way your U.S. benefit is figured. For more information, call our toll-free number, 1-800-772-1213, and get the publication, Windfall Elimination Provision (Publication #05-10045). If you are outside the United States, you may write to us at the address in Part VIII.

You can find the whole agreement at: http://www.ssa.gov/international/Agreement_Pamphlets/sweden.html#coverage
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Hope this helps.

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