401k Transfer?

[Mrjlh]

This Californian needs some advice. I was in the military in Thailand many years ago during the Vietnam conflict and I made a promise to my self to go back and retire there. At 59 ½ yrs old that day is now coming and I’m in the planning stages. I have two plans in mind depending on what happens in the next few months.

Plan one: due to a stroke several years ago, I have applied for SSDI. If approved I will receive a steady income of $70K BHT+ a month until I reach 66 yrs and then it increases (a small amount). This is not very much for living in the USA, but acceptable for Thailand and other country’s. I have $900,000 Baht in a 401K plan currently. My monthly income and 401K meets the minimum standards required for a retirement visa. For this plan my question is, “How do I transfer the 401K money at full value into a Thai Bank without losing any funds?” Do Thai Banks offer 401K’s? I don’t want to touch this money until I reach 66yrs or really need it.

Plan two: I plan in acquiring a CELTA certification and would teach English for a while until I can retire if not approved for SSDI. I’d rather just do plan one.

What advice might you have? Any suggestions would be greatly appreciated.

[Thaiquila]

OK, I think I understand your questions, but you are probably not going to like the answers.

401K is strictly a USA program; I would be shocked if any non US bank can administer your 401K funds. So that means you leave the 401K in whatever US financial institution you have it in now, or alternatively, you could roll it over into another US financial institution if they offer features you want.

Or perhaps you meant you want to liquidate the 401K completely and then move it to Thailand. Sure, you could do this by opening a Thai bank account and wiring in the money, but it would no longer be a 401K and you would be lucky to be making any interest on it. Also, for use for immigration if you don't have an income, you need to spend from that account and replenish every year, sounds like you can't do that.

If you do get a pension income over 800K baht a year, you could qualify for a retirement visa based on that, but you would also want to have some kind of Thai bank account as well, but it wouldn't have to be anywhere near 800K. So that sounds like a possibility for you. Of course, you would need to confirm that SSDI will pay to US citizens living abroad.

The 401K funds you can leave in the US, or if you want, you can start taking out distributions before then without penalty after age 59 1/2.

Best of luck to you.

[lopburi3]

As said the 401k should stay in a US bank if you want to continue it. The requirement for monthly income is only 65k (baht) so you will meet that. As said a bank account is also required but that can be in the 100-200k baht range. You could take out the 800k and deposit it here if the SSDI does not come through and continue to replace/top up each year. If you want to work, however, you can not use retirement visa/extension of stay.

[naka]

Your post is very confusing, exactly how much is "$900,000 Baht". ?

Naka.

[lopburi3]

Your post is very confusing, exactly how much is "$900,000 Baht". ?

Naka.

So right! I only noticed the "$" sign so if all he has is 900k (baht) he may have to reconsider his plans if SSDI does not come through.

[Mrjlh]

Your post is very confusing, exactly how much is "$900,000 Baht". ?

Naka.

So right! I only noticed the "$" sign so if all he has is 900k (baht) he may have to reconsider his plans if SSDI does not come through.

Sorry, I am use to putting the $ (dollar) sign in front of monitary numbers. I have funds equalling 900K Baht in a 401K plan. ($21,000US and growing.)

[Mrjlh]

Let's simplify this.

I want to retire with a "retirement visa" in Thailand. As I understand the rules I need a monthly income of 60K baht and 800K baht in the bank to qualify. Is this correct?

I expect a monthly income of 65K Baht for life. My question is: Does the 800K Baht need to be in a Thai bank or can I simply show I have the equiv funds in a financial banking account for which I have access and sole control over?

I would also have another 100K-200K Baht in a Thai bank if required.

Did this help clarify my question?

If I understand your previous reply, I need to liquidate the 401K and put it in a Thai Bank. Correct?

[Sir Burr]

I can confirm what previous posters have told you.

With a 401k plan, you only have three choices:-

1. Leave it where it is.

2. Roll it over into another 401k, or, IRA. The check will be sent directly to the institution that will administer the scheme.

3. Cash it in. If you do this, the check will be sent to the address you stated was your home address. They will not send it to a bank, or, anywhere else. Also, as you are a US citizen, you will have to pay tax on it.

[Noel]

Let's simplify this.

I want to retire with a "retirement visa" in Thailand. As I understand the rules I need a monthly income of 60K baht and 800K baht in the bank to qualify. Is this correct?

I expect a monthly income of 65K Baht for life. My question is: Does the 800K Baht need to be in a Thai bank or can I simply show I have the equiv funds in a financial banking account for which I have access and sole control over?

I would also have another 100K-200K Baht in a Thai bank if required.

Did this help clarify my question?

If I understand your previous reply, I need to liquidate the 401K and put it in a Thai Bank. Correct?

To extend your Non-Immigrant 'O' visa on the grounds of retirement, you need to show either 800k Baht (sourced from overseas in a foreign currency) in a Thai Bank, or proof of a foreign sourced monthly income of 65k Baht.

They will also allow a combination of capital and income in meeting the annual 800k Baht figure.

[lopburi3]

You need 65k income or a bank account in Thailand of 800k or a combination plus a Thai bank account (the one with 800k or less meets that requirement). Now if you apply for an O-A visa from the US you may be able to use that 401k to meet the bank requirements (up to the Consulate) for your first year - but each year after will require the 65/800k type requirements and the bank money must be in Thailand.

[PeaceBlondie]

Sir Burr is probably the first to point out the danger of cashing in the $21,000 from your 401(k) - the cash is included in your gross income for income tax purposes, in the year you withdraw it. There's no early withdrawl penalty, but it's subject to income tax.

As others such as Lopburi3 point out, you don't need 800K AND a pension of 800K per year. It can be one, the other, or a combination.

If you do receive the SSDI income, that's sufficient to qualify you for the O visa. Or, if you're in the USA and get the O-A visa, some consulates would honor the 401(k) nestegg. But when you renew that O-A visa in Thailand, they only count money that's in Thai banks at that time.

Working in Thailand presents problems. Of course, if Social Security knew you worked in Thailand, would they yank your SSDI? If you don't get a work permit in Thailand, you'd be breaking Thai law. I'm not sure that you can get a work permit on a retirement type visa.

Good luck.

Edited January 27, 2006 by PeaceBlondie

[Mrjlh]

Thank you all very much. Your inputs have been of great value. I know I will have more questions as time goes by.

Thanks again, Sawadee!

Edited January 27, 2006 by Mrjlh

[GuestHouse]

Please read this and be very very sure that it is advice given in your very best interests

ABSOLUTELY DO NOT EVEN CONTEMPLATE BRINGING YOUR LIFE'S SAVEINGS (YOUR 401) TO THAILAND - LEAVE IT WHERE IT IS - GIVING YOU AN INCOME AND SAFE FROM BEING STOLEN FROM YOU

Also be aware that money you hold in a Thai bank will accrue interest at a very special reduced rate. Foreigners receive reduced rates of interest on deposits they hold in Thai banks.

The golden rule is 'Do not bring money to Thailand that you cannot afford to loose' The rule comes about from the hard won experience of people who brought money to Thailand and lost the lot.

You cannot afford to loose your 401 - Leave it where it is safe.

[PeaceBlondie]

I might add that a nestegg of $21,000 is not much. It wouldn't buy one week in an American hospital, including surgery. It wouldn't buy 18 months of nursing home care. Even in Thailand, 850,000 baht won't last forever.

The original poster's dilemna, though , is that he doesn't have the savings or the income to survive in the USA. Best to leave the 401(k) in the USA and try to survive on his SSDI pension in Thailand.

[lanny]

Without more specific information on your finances, etc. no one can give you very definitive advice regarding your future. However, being a tax accountant dealing with Americans in Thailand, I can make some general comments.

First, and foremost, your 401K will be fully taxable, whether you withdraw it now or in the future. Even if you move to Thailand, you will be required to file returns and pay any tax due. So, there is no advantage to either taking it now or waiting to some time in the future.

Second, a Thai retirement visa is not that difficult to obtain. You need to show evidence that you have income from a source outside Thailand and money in a Thai bank. The total of the annual income and the balance in the bank must be more than 800,000 Baht. So, for example, if you have monthly income of 50,000 Baht -- 600,000 Baht per year -- you would need at least 200,000 Baht in the bank.

Third, a retirement visa specifically says that employment is prohibited. To get a work permit, you would need to obtain or change to a non-immigrant B visa.

Finally, if you did get a work permit, you would be liable for Thai income tax on your earnings. Thailand does not tax your pension, however, so neither the SS nor the money from your 401K would be taxed here. Unless you were to make more than $80,000 a year, it is unlikely that you would owe any US tax on the Thai income.

Other factors you should consider, now or in the future. Once you become eligible for Medicare, you will be given the opportunity to subscribe to Part II. Unless you expect to return to the US, you should not take this option. Currently, it costs about $50 or $60 a month, which is deducted from your SS benefits. At this time, no Medicare benefits are paid for services rendered outside the US, under either Part I or Part II. If effect, as long as you live outside the US, you receive nothing from Medicare, so paying the premium for Part II is a waste of money.

[Mrjlh]

Without more specific information on your finances, etc. no one can give you very definitive advice regarding your future. However, being a tax accountant dealing with Americans in Thailand, I can make some general comments.

First, and foremost, your 401K will be fully taxable, whether you withdraw it now or in the future. Even if you move to Thailand, you will be required to file returns and pay any tax due. So, there is no advantage to either taking it now or waiting to some time in the future.

Second, a Thai retirement visa is not that difficult to obtain. You need to show evidence that you have income from a source outside Thailand and money in a Thai bank. The total of the annual income and the balance in the bank must be more than 800,000 Baht. So, for example, if you have monthly income of 50,000 Baht -- 600,000 Baht per year -- you would need at least 200,000 Baht in the bank.

Third, a retirement visa specifically says that employment is prohibited. To get a work permit, you would need to obtain or change to a non-immigrant B visa.

Finally, if you did get a work permit, you would be liable for Thai income tax on your earnings. Thailand does not tax your pension, however, so neither the SS nor the money from your 401K would be taxed here. Unless you were to make more than $80,000 a year, it is unlikely that you would owe any US tax on the Thai income.

Other factors you should consider, now or in the future. Once you become eligible for Medicare, you will be given the opportunity to subscribe to Part II. Unless you expect to return to the US, you should not take this option. Currently, it costs about $50 or $60 a month, which is deducted from your SS benefits. At this time, no Medicare benefits are paid for services rendered outside the US, under either Part I or Part II. If effect, as long as you live outside the US, you receive nothing from Medicare, so paying the premium for Part II is a waste of money.

Thank you very much. This has given me a very clear picture of what I can expect and what I need to do to protect what little income I will have. People who are not from the USA don't realize there are many ways that the working class here get screwed. Divorce laws are just one reason why I'm in the position I'm in. Company failures, illness, bad financial planning just to name a few. Medicare is now at $78US. Thank God I have Veterans bennefits for my medical expenses with services available in Phillipian Islands.

My yearly income on SSDI will be just over 800K Baht. Does this mean I would not be required to have as much in a Thai Bank account because my monthly check could be directly deposited and the total sums would exceed the required amount? Plus i will still have and additional 800K Baht to draw from in my 401K plan. With the cost of living there I wouldn't really need to work so I'm not really concerned about a work visa. Right now I'm simply trying to plan using different possibilities that may take place. Plus I have an inheritance some day that will provide me anoyther $200K US. And that amopunt can't be figured into the formula until it occurs.

So it appears I really do not have much to worry about. Only need to provide myself health insurance. If one does not apply for medicare payments at the time is is offered there is a penality to pay when you sign up later. I don't have the particulars but it does have its downside. The advantage of having it is being able to use it when one returns to the US if only for a short stay. But like you said it may be a waste of money.

Thank you all once again for your help.

[lanny]

Basic medicare is free, once you reach retirement. This is the part that covers hospital costs, etc. Part II, which you must pay for, covers doctors, etc. -- basically outpatient costs. I have a few clients who are Thai who have lived/worked in the US and are now drawing SS benefits. For them, I highly recommend that they drop Medicare B. For all other clients, I tell them it is discretionary; it depends on ones long-term intention as to where to live.

For your retirement visa, you need to show a combination of income and money in the bank that equals 800,000 Baht. Even if your income is more than this, you still need to present evidence of money in the bank. In such a case, the amount isn't really important.

In one case that I am aware of, the person applying had money in 2 Thai banks. When applying for renewal of a retirement visa, letters from both banks with copies of the passbooks were presented. The immigration officer looked at these and handed on set back!

[astral]

You should be aware that Thai banks do NOT pay interest to foreigners!!

[BKK90210]

Thank you very much. This has given me a very clear picture of what I can expect and what I need to do to protect what little income I will have. People who are not from the USA don't realize there are many ways that the working class here get screwed....

Darn right!...eventhough I'm not in the babyboomer generation like you...But in the x-generation...I know that most people in my generation when we're ready to retire, there won't be any social security$$$ left for any of us...that's why we're saving on our own vigorously!

[Thaiquila]

A few points of detail.

The requirement for the retirement visa extensions are:

800,000 K baht in a Thai bank account

or

800,000K baht in a pension of some kind

OR

A combination of both.

So if you have a pension of over 800K you are OK, but they will want to see some kind of Thai bank account as well, but it could be quite small from my understanding.

The miscommunication that I see here is that people who have 800K in a Thai bank account can qualify on that ALONE without showing any pension income whatsoever.

What they do have to show on renewal is that they spend some of the money from the Thai bank account over the course of the year and then transferred in enough to TOP OFF the account again over 800K. Lots of people with this situation; in other words, people with money and investments but no pension.

Another point which perhaps can be verified. It was my understanding that you can deny payment for the Medicare supplement and then IF YOU DO MOVE BACK, you can still sign up for it later, but you will pay some kind of financial penalty. So, in that case, it would not necessarily be a final decision.

[ChiefBEM]

I hate to add to the negatives.

But, I checked with the Social Security Administration and was told that Thailand is not on the list of countries that benefit checks can be directly deposited in a local bank.

I was told the best option is to have the benefit checks deposited in a US Bank and every month (Depending on the specified bank's process) send a request to the US Bank to have a specified dollar amount Electronically Transferred into your Thai bank account.

If anyone is getting their Social Security Benefit Checks directly deposited into a Thai Bank, please let me know how.

Veterans Administration Benefit Checks and military retirement checks will not do direct deposit to banks in Thailand.

Regards,

ChiefBEM

[lopburi3]

You are wrong Chief and yes people do have SSA directly deposited. They can and do have the ability to deposit directly into Bangkok Bank as per the below procedure from the US Embassy web site:

I would like to Direct Deposit to a Thailand-Based Bank. What do I need to do?

Only the Bangkok Bank of Thailand provides Direct Deposit service for persons who receive benefits from the following agencies: Social Security Administration (SSA), Veterans Administration (VA), and Civil Service.

1. Open “Direct Deposit” Account at the Bangkok Bank branch nearest your home.

The Bank will assist you in opening a “Direct Deposit Account. We suggest you to clearly tell staff that this account is for receiving pension from SSA, or VA.

2. Sign up Form 1199: Please bring 3 completed forms sf1199 to a Head Quarter of Bangkok Bank. Bank will forward your completed Direct Deposit form (Form 1199 A) to SSA in US. You will be able to access your benefits from the Bangkok Bank branch near your house after your request has been completely processed. This often takes a few months. For more information please contact:

Bangkok Bank Public Company Limited

Foreign Exchange Service Section

Retail Payment Services Department

333 Silom Road, Bkk. 10500

Tel: (02) 230-1322-3

[lopburi3]

Actually I should have said SSA are wrong as you are just the receiver of the information. If you check older posts you will find this has been discussed and one of the members here worked for SSA and has personally arranged the service.

[PeaceBlondie]

Thanks for reminding me - no, informing me - of that. So, if I had my pensions deposited directly, I guess I'd save 1% on the transfer fees I'm paying now. What are the disadvantages?

[lopburi3]

Disadvantage would be tax liability if no tax treaty exemption (US government pensions are exempt) although this would not normally become an issue for those of retirement age.

You must be alive to obtain funds and do so in person - no ATM access to the account your direct deposit is paid into - but you could open another account and transfer each month (but you will have to make a visit to do so).

Loss of US bank account/credit or debit card/loss of place to direct pay tax refunds/loss of ability to pay international mail order/internet type bills.

Of course all those negatives are negated if you keep another account open (poster has another account so would expect him to keep that and probably a checking account open).

[Noel]

You should be aware that Thai banks do NOT pay interest to foreigners!!

Errm, the ones I use (Siam Commercial and Bangkok Bank) most certainly do pay interest to foreigners.

[Artisan]

"Income" means net income after all off-takes and not gross income. Your Embassy will provide a letter (at a cost) to confirm this net income.

You should be aware that Thai banks do NOT pay interest to foreigners!!

Errm, the ones I use (Siam Commercial and Bangkok Bank) most certainly do pay interest to foreigners.

I use these two banks also........and receive some interest too.

[PeaceBlondie]

I get interest from bank of Ayuddyha, but the only time I checked, it appeared to be around 0.5% on a savings account. They did say, however, that long term deposits would pay more. I checked last month, and it was about 2%, but if you deposited millions of baht for a couple of years, maybe it was 3%.

I'm off to find a Bangkok Bank in Hua Hin. Maybe I'll have one of my pensions deposited there, and leave the other govt. pensions to be deposited in America. Besides, my American bank card expires tomorrow, and the new one's in Atlanta! If you lose that one card, you're really out of luck!

[JimGant]

First, and foremost, your 401K will be fully taxable, whether you withdraw it now or in the future. Even if you move to Thailand, you will be required to file returns and pay any tax due. So, there is no advantage to either taking it now or waiting to some time in the future.

Well, there certainly is *one* advantage to not taking it out now: State income taxes (and California's marginal rate ain't the lowest).

Once you move to Thailand and file your last PY ('part year') tax form with California, what you then withdraw from your 401(k)s and IRAs is not subject to California income tax. This was a test case a few years back, when California went after former California residents who had moved to states without income tax. California lost in the Federal court.

All states are somewhat different in proving (or disproving) residency. But if you're really cutting all/most residential ties with the States, it shouldn't be too hard to do.

Oh, on our way thru Hawaii, we got Hawaiian drivers' licenses, using a friend's local address, as Virginia had pointed out that a driver's license was one form of proof that you hadn't abandoned the state. And there is an advantage to a US driver's license when you want to rent a car, or so we were told.

but you could open another account and transfer each month (but you will have to make a visit to do so).

Lop,

Is that because this type of bank account is firewalled from the other type of accounts you can open on Internet banking?

We have three bank accounts with Bangkok Bank that we can freely exchange between on the Internet (having opened Internet banking with Bkk Bank). Plus, we have permission to Internet transfer funds to other non-owned accounts.

I wonder why this wouldn't work when this special SSA account is involved.........?

[lopburi3]

Because the account is a special no atm access type for the purpose of direct deposit of US Government checks. Banks are responsible for return of US Government funds in the event of death so this protects the bank. So you must be physically present and sign a withdrawal slip. There have been cases where normal accounts are being used from reports here but it has been via what are probably loopholes rather than by design.