Tax Payment for Retirement Lump Sum :o

[junkofdavid2]

Hi, I recently resigned from a company as a full time employee; and they gave me a small lump sum "from your retirement fund" (note that this was not "severance").

Since I have multiple jobs/professions (including my own business), I file my own income tax at the end of the year; adding up my different incomes from different sources and applying the corresponding tax rate based on the total annual income.

So the question is: How do I treat this "retirement" lump sum? Is it added as part of my salary income and therefore included in my overall income... to which I apply the personal income tax scale?

[KNJ]

Resident where?

Tax where?

Too little information

[lopburi3]

Was it a return of your tax paid contributions to that retirement fund? That should not be income AFAIK. But as said you also need to say if for Thailand or another location.

[Soutpeel]

Resident where?

Tax where?

Too little information

Plenty of information

The OP was working for a Thai company so Resident for Tax in Thailand, Tax is payable in Thailand...

OP..one suspects this is your contribution to the retirement fund, they are giving you back and typically this would be taxable on your overall income

as I think you will find this money was taken off your gross not your net, therefore no tax has been paid on it

[lopburi3]

He did not say any such thing - could have been working anywhere in the world for any company.

[SpokaneAl]

He did not say any such thing - could have been working anywhere in the world for any company.

I agree - we have no idea on the specifics.

If the retirement payout was based on a US company and the OP is a US citizen, then the payout will generate a 1099R and is subject to ordinary income tax rates. The payout is added to the mix of other income, standard or itemized deductions and exemptions are subtracted and taxes are calculated on the result.

Hopefully, again assuming this is US income, 10 or 15% of the payout was withheld for taxes.

Also, if the OP is less than 59.5 years old he/she will be subject to an additional premature distribution penalty of 10% of the distribution amount.

Edited August 30, 2015 by SpokaneAl

[steve187]

the op posted too little information, and for 24 hours has not been back, forget it and move on to the next question/thread

[junkofdavid2]

Sorry guys, I thought I had enabled notifications for this thread but I apparently didn't.

Thai company, Thai work permit holder, for work done in Thailand (my apologies I thought this would've been assumed on a Thailand forum).

When I left the company, they gave me a withholding tax certificate with salary income for the year and how much was deducted for that, and it also included the retirement fund amount but zero tax deducted for that and payroll officer just told me "it's different" (hardly spoke English).

In my monthly pay slips, there is nothing indicating a deduction for this "retirement fund," only deduction for tax, so I would think that it was completely a company contribution or employee benefit equal to 40% of salary x number of years (dunno if that matters). They said that for employees who have stayed for 20+ years, it will be 75% x number of years. So it seems to be a company benefit of some sort and not a government required benefit.

I'm wondering if I should treat it as regular salary income.

Edited October 1, 2015 by junkofdavid2

[Misty]

Sorry guys, I thought I had enabled notifications for this thread but I apparently didn't.

Thai company, Thai work permit holder, for work done in Thailand (my apologies I thought this would've been assumed on a Thailand forum).

When I left the company, they gave me a withholding tax certificate with salary income for the year and how much was deducted for that, and it also included the retirement fund amount but zero tax deducted for that and payroll officer just told me "it's different" (hardly spoke English).

In my monthly pay slips, there is nothing indicating a deduction for this "retirement fund," only deduction for tax, so I would think that it was completely a company contribution or employee benefit equal to 40% of salary x number of years (dunno if that matters). They said that for employees who have stayed for 20+ years, it will be 75% x number of years. So it seems to be a company benefit of some sort and not a government required benefit.

I'm wondering if I should treat it as regular salary income.

Hi, it sounds like this may have been from a Thai Provident Fund, is that correct? If so, the tax calculation may be different. If you're over 55 have contributed for more than 5 years it may not be taxable at all. Here's a link to the Thai Provident Fund website with some details in English: http://www.thaipvd.com/content_en.php?content_id=00308

If you have further questions or need help I'd suggest contacting a Thai accountant to help you file your return for this year. I think Sunbelt Asia offers this as a service, and others may as well.

Finally, there was an announcement that in the future Thai Provident Funds will be able to be rolled to RMFs for further deferral in the future. Once you reach age 55 you should be able to collect the amount tax-exempt. I haven't had a chance yet to research this, so would suggest you ask a Thai accountant if you think this may make sense for you.

Cheers

[junkofdavid2]

@Misty extremely helpful, thanks!

Exactly what I was lookin for. Im not 55+ and I resigned after 5 yrs and 1 day so I fall into case 2 of your page.

Also, now I understand why my nice boss prevented me from resigning earlier and said I should resign a few months later to complete a 5 yr period "because of social fund" (I was puzzled coz 'social' didn't seem like the right word) but now I guess she meant provident fund.

Cheers!

Cheers!

[fletchsmile]

@Misty extremely helpful, thanks!

Exactly what I was lookin for. Im not 55+ and I resigned after 5 yrs and 1 day so I fall into case 2 of your page.

Also, now I understand why my nice boss prevented me from resigning earlier and said I should resign a few months later to complete a 5 yr period "because of social fund" (I was puzzled coz 'social' didn't seem like the right word) but now I guess she meant provident fund.

Cheers!

Cheers!

Yes it;s a good page that lays out pretty well.

You'll probably need to crunch the numbers on which of the two choices under case 2 is better.

In my case when I did this the company I worked for did the calcs. But it's worth checking it yourself as to which is better, as often companies get it wrong, don't know or don't care.

As an aside,

If you got any severance pay (separate from pensions) there's also an option to have that taxed separately from normal income - to the extent it exceeds the exempt amount and any tax is due - or add it to your income and have the excess taxed that way as normal. In most cases I can say that it is better to have it taxed separately and complete a separate form rather than have it taxed together with other income as normal.

For pensions though it need a bit more thought as to which option under case 2 is best, as it depends partly on whether you contributed or not and how much among other things.

Cheers

Fletch

[junkofdavid2]

Thanks for the ideas Fletch; yes I checked which option is best for me and it seems that it's best if I do the (7,000 x yrs) x 0.5 instead of treating it as usual net income (I'm on a high tax bracket coz of my varied sources of income).

No severance for me as I left on my own, and I'm too far away from a pension