# IRA withdrawal question



## Carmonli (Jul 1, 2014)

I'm the US citizen; my husband is a non-resident. We live in Israel.

He has a small IRA account that was started when he worked in the US in the mid-1980s, totalling less than $9,000. He's now 64 and wants to withdraw the money and deposit it in our (shared) US bank account. The IRA is closed in a CD that will be finishing its term in a couple of weeks.

My question is this: what are the tax implications of withdrawing from the IRA? I fill out my tax return as married filing separately. He doesn't file at all, and doesn't want to start. Will the bank automatically deduct the taxes owed (if any)? Would this money be considered as (shared) income? What is the most pain-free way to handle this situation?

Thanks!


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## Bevdeforges (Nov 16, 2007)

If the bank has a W8-BEN on file for him (as a non-resident alien), then they are supposed to withhold 30% of whatever he withdraws as the NRA tax. He won't have to file any sort of return if they do so. And at that point you're both all square with the IRS.


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## Carmonli (Jul 1, 2014)

Thanks, I don't think they've ever asked him to sign one. Can we be proactive and ask for that? Would that set off any alarms?


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## Bevdeforges (Nov 16, 2007)

You can certainly ask them about filing a W8 BEN, or you can just download the form from the IRS website and send it when you send your request to liquidate the CD.


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## JustLurking (Mar 25, 2015)

Bevdeforges said:


> If the bank has a W8-BEN on file for him (as a non-resident alien), then they are supposed to withhold 30% of whatever he withdraws as the NRA tax. He won't have to file any sort of return if they do so. And at that point you're both all square with the IRS.


Israel has a tax treaty with the US that provides for pension withdrawals being exclusively taxable to country of residence (so Israel, in this case). From Article 20(1):


> 1. Except as provided in Article 22 (Governmental Functions), pensions and other similar remuneration paid to an individual shall be taxable only in the Contracting State of which he is a resident.


With a valid W-8BEN on file, then, the bank should withhold nothing at all for US tax. If they do, anything withheld should be recoverable from the IRS via forms 1040NR and 8833.

See also the IRS's table of tax treaty withholding rates for nonresident aliens:

https://www.irs.gov/pub/irs-utl/Tax_Treaty_Table_1_2019_Feb.pdf


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