New US Citizen previous mexican retirement account


T

TheHermit

Here's the situation:

Wife was teacher in mexican federal school and a mexican citizen.
They have AFORES retirement account where you contribute a portion of your
salary.
She contributed all money in account while mexican citizen.
She could not take any money out untill 55 years of age.
We married and she quit her job and no further money was put into account.
She became a US citizen and now over 55 can take her Mexican retirement
account money out.
Is that retirement money taxable in US?
 
T

TheHermit

Can you point me to IRS publication? or other that takes this into account?
 
Ad

Advertisements

C

Capt. Tuttle

TheHermit used his keyboard to write :
Can you point me to IRS publication? or other that takes this into account?

I just went through something just like this.
The best answer from the IRS was "maybe".
I paid a tax expert to give me an answer.
The best information I can give you is to first ask: Does she pay taxes
to Mexico on the payment?
From the answer to that question you can begin your search through the
tax treaty we have with Mexico.
http://www.ustreas.gov/offices/tax-policy/treaties.shtml#mexico
I will add good luck!!
 
D

D. Stussy

TheHermit said:
Here's the situation:

Wife was teacher in mexican federal school and a mexican citizen.
They have AFORES retirement account where you contribute a portion of your
salary.
She contributed all money in account while mexican citizen.
She could not take any money out untill 55 years of age.
We married and she quit her job and no further money was put into account.
She became a US citizen and now over 55 can take her Mexican retirement
account money out.
Is that retirement money taxable in US?
Yes. As a U.S. citizen, she is taxed on her WORLDWIDE income.

See also "foreign tax credit" if Mexico would also tax it (and whether
there's a treaty provision that exempts it from Mexican taxes).
 
T

TheHermit

Ok, if it is taxable and if the money is distributed how about the
following.

Being that the money is in a mexican retirement fund can we then rollover
the distribution to a US retirement fund like an IRA and protect the money
from being taxed immidiately?

Maybe even getting part of the money distributed (and taxed in US) and part
of it rolled over!

And being that Mexico did tax the money can we not put in for a tax credit!

Thank you for your input.
 
T

TheHermit

Ok, if it is taxable and if the money is distributed how about the
following.

Being that the money is in a mexican retirement fund can we then rollover
the distribution to a US retirement fund like an IRA and protect the money
from being taxed immidiately?

Maybe even getting part of the money distributed (and taxed in US) and part
of it rolled over!

And being that Mexico did tax the money can we not put in for a tax credit!

Thank you for your input.
 
T

TheHermit

Bad news

You cannot roll over mexican retirement account money to IRA in US per
Fidelity Investments
 
Ad

Advertisements

C

Capt. Tuttle

TheHermit wrote :
Bad news

You cannot roll over mexican retirement account money to IRA in US per
Fidelity Investments
I did not realize you wanted to move the money into the U.S. I'm sure
if you do that you will pay taxes one way or another. I thought you
were talking about periodic payments. In our case the money is sent to
our bank in the U.S., but is not taxable income thanks to the tax
treaty.
You probably should talk to a tax pro who can try to read all the mess
that is involved in the tax treaties. It really is a mess.
My CPA takes her taxes to a tax attorney!
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Top