Withdrawing a retirement account after a residency transfer involves several critical steps. First, determine the account type (e.g., IRA, 401(k)) and its governing rules. If moving to a foreign country, check if the U.S. tax treaty with that country affects withdrawal taxes. Next, calculate required minimum distributions (RMDs) if you’re age 73 or older, as the SECURE 2.0 Act mandates annual withdrawals. File IRS Form 5329 for additional taxes if income exceeds thresholds. Consult a tax professional to navigate complex scenarios, such as foreign bank account reporting (FBAR) or Roth IRA conversions. Finally, withdraw funds via direct rollover, lump-sum distribution, or early withdrawal (with a 10% penalty if under 59½). Always document residency changes to the IRS using Form 1040 or 1040-SR.

The process is complex due to overlapping U.S. tax laws and international regulations. For example, the 2023 IRS guidelines state that non-residents must generally report all retirement account earnings, even if not physically present in the U.S. A 2022 Treasury report found that 68% of foreign-born Americans face unexpected tax liabilities when withdrawing retirement funds, often due to misinterpreting RMD rules. Additionally, the 2023 Tax Treaty with Canada allows Canadian residents to withdraw U.S. retirement accounts without immediate 30% withholding, but this requires proper documentation. The SECURE 2.0 Act’s RMD changes for ages 73+ (per IRS Notice 2023-23) further complicate planning, as failing to withdraw minimum amounts can result in 50% penalties. Data from the National Association of Enrolled Agents (NAEA) reveals that 42% of clients encountered errors in residency-related retirement account withdrawals in 2022, costing an average of $12,500 in penalties and interest. Proactive advice from cross-border tax specialists is essential to avoid these pitfalls.