Assets (401k?)

[Hilde 381]

Hi Friends,

 

Can USA-based 401k be used as assets?

 

A little background - I have foreign-earned income and my job will not continue in the US.

But I do have a 401K account in the US. Would that help?

 

Thanks,

[Crazy Cat 39,218]

Possibly.  It depends on the amount in the 401K, how much is vested, and the liquidity of the funds.  

[Hilde 381]

49 minutes ago, Lucky Cat said:

Possibly.  It depends on the amount in the 401K, how much is vested, and the liquidity of the funds.  

This is all very new terminology for me (sorry, healthcare worker here...) 

 

Amount is 120k

100% vested (had to look this up ) 

Liquidity of funds: I have no idea how to find this out - (I am 43 yrs old, so I guess there would be a huge penalty for withdrawal)

Edited April 29, 2021 by Hilde

[Ryan H 3,790]

Moved from Progress Reports to Process & Procedures.

[Ana & TJ 25]

On 4/29/2021 at 8:08 AM, Hilde said:

This is all very new terminology for me (sorry, healthcare worker here...) 

 

Amount is 120k

100% vested (had to look this up ) 

Liquidity of funds: I have no idea how to find this out - (I am 43 yrs old, so I guess there would be a huge penalty for withdrawal)

I believe early withdrawal of funds would incur a 10% penalty plus federal and state taxes. Liquidity is if you  requested the funds today, when would they be available for you to use. Should be able to call the manager of the fund and ask how long an early withdrawal process would take.

[pushbrk 12,105]

4 minutes ago, AL TJ said:

I believe early withdrawal of funds would incur a 10% penalty plus federal and state taxes. Liquidity is if you  requested the funds today, when would they be available for you to use. Should be able to call the manager of the fund and ask how long an early withdrawal process would take.

Kind of.  As long as the asset can be converted to cash within a year, "without doing harm to the sponsor..." that's liquid enough.  The issue here is HOW MUCH of the money is available after paying  taxes and withdrawal penalty.  

 

Assets are not INCOME, so for a spouse you need 3X the income requirement in liquid assets.  (Really three times the income shortfall but in this case that's the same number.)  Depending on household size and the amount actually available in cash, it could be tight.  Does it "help"?  Yes.  Is it enough to avoid a joint sponsor?  Not so clear.

[Adventine 3,187]

Normally there are heavy penalties and taxes involved in a 401k early withdrawal. Moreover, you won't be able to "put it back". You will lose that tax-advantaged space for life.

 

However, the CARES Act has waived some of these penalties. Take a look at the article below. Although it addresses 401k withdrawals made in 2020, there may be some useful info that can help you make a decision. You may also want to consult a qualified fiduciary financial advisor to help you understand the impact of an early 401k withdrawal:

 

Source: https://www.sec.gov/oiea/investor-alerts-and-bulletins/covid-19-related-early-withdrawals-retirement-accounts-be
 

Quote

 

Coronavirus-Related Hardship Withdrawals and Loans Under the CARES Act—Terms, Conditions and Intended Benefits

Ordinarily, if you take a hardship withdrawal from your retirement plan, you permanently reduce your retirement savings balance. In other words, you are not allowed to put the money withdrawn back in the retirement account after the hardship has passed and you must pay income tax on it. Depending on your company’s policies, you also might not be able to resume contributing for six months or more. In addition, you must pay a 10 percent penalty if you withdraw funds before reaching age 59½.

The CARES Act provides significant, temporary relief from these provisions, including for individuals who experience adverse financial consequences as a result of COVID-19 related events. The CARES Act allows qualified individuals impacted by the coronavirus pandemic to pay back funds withdrawn from a qualified retirement plan over a three-year period, and without having the amount recognized as income for tax purposes. The new law also temporarily waives the 10 percent early withdrawal penalty for coronavirus-related distributions (CRDs) made between January 1 and December 31, 2020.  In addition, the CARES Act exempts CRDs from the 20 percent mandatory withholding that normally applies to certain retirement plan distributions.

 

 

Edited May 5, 2021 by Adventine

[Nitas_man 3,100]

On 4/29/2021 at 8:11 AM, Hilde said:

Hi Friends,

 

Can USA-based 401k be used as assets?

 

A little background - I have foreign-earned income and my job will not continue in the US.

But I do have a 401K account in the US. Would that help?

 

Thanks,

Yes

20 hours ago, pushbrk said:

Kind of.  As long as the asset can be converted to cash within a year, "without doing harm to the sponsor..." that's liquid enough.  The issue here is HOW MUCH of the money is available after paying  taxes and withdrawal penalty.  

 

Assets are not INCOME, so for a spouse you need 3X the income requirement in liquid assets.  (Really three times the income shortfall but in this case that's the same number.)  Depending on household size and the amount actually available in cash, it could be tight.  Does it "help"?  Yes.  Is it enough to avoid a joint sponsor?  Not so clear.

Yes again.  I used ‘em both - cash and 401k.  No blink at the counter.

Edited May 5, 2021 by Nitas_man

[Nitas_man 3,100]

On 4/29/2021 at 10:08 AM, Hilde said:

This is all very new terminology for me (sorry, healthcare worker here...) 

 

Amount is 120k

100% vested (had to look this up ) 

Liquidity of funds: I have no idea how to find this out - (I am 43 yrs old, so I guess there would be a huge penalty for withdrawal)

10% then the normal tax rates kick in.

[pushbrk 12,105]

21 minutes ago, Nitas_man said:

Yes

Yes again.  I used ‘em both - cash and 401k.  No blink at the counter.

Again, success in this context depends on the totality of circumstances as judged by the Consular Officer.  Any 401k is a positive not a negative.  Whether JUST the 401k will be enough to carry the day depends on size and the rest of the circumstances.

[Nitas_man 3,100]

11 hours ago, pushbrk said:

Again, success in this context depends on the totality of circumstances as judged by the Consular Officer.  Any 401k is a positive not a negative.  Whether JUST the 401k will be enough to carry the day depends on size and the rest of the circumstances.

Question was can you

 

Answer was yes

 

I only answered from

our experience in 2011 (I864) and 2018 (I134)

 

With that in mind 40 quarters are done for us.  No more affidavits.  LOL

 

 

 

 

 

 

Edited May 6, 2021 by Nitas_man

[Hilde 381]

I had my interview and was approved. I had NOT put my 401K in my original 864. But then I got an RFE when we were DQ´d saying that I don´t meet the minimal financial requirements. I went ahead and got a joint-sponsor just in case. 

But on the interview I presented the exact same 864 but updated it with my 401K information under assets.

We were approved without any questions regarding finances.

Maybe it made a difference. Maybe it didn´t. I am just happy it got approved.

I ended up not using the joint sponsor information, bc they didn´t request it.

So happy everything is done.
Thanks everyone for the help!

[pushbrk 12,105]

7 hours ago, Hilde said:

I had my interview and was approved. I had NOT put my 401K in my original 864. But then I got an RFE when we were DQ´d saying that I don´t meet the minimal financial requirements. I went ahead and got a joint-sponsor just in case. 

But on the interview I presented the exact same 864 but updated it with my 401K information under assets.

We were approved without any questions regarding finances.

Maybe it made a difference. Maybe it didn´t. I am just happy it got approved.

I ended up not using the joint sponsor information, bc they didn´t request it.

So happy everything is done.
Thanks everyone for the help!

Since you submitted a joint sponsor's package to NVC, it doesn't matter what was requested at the interview.  Joint sponsor is still on the hook.

 

12 hours ago, Nitas_man said:

Question was can you

 

Answer was yes

 

I only answered from

our experience in 2011 (I864) and 2018 (I134)

 

 

No worries.  I followed up with a more complete answer based on current experiences.

[Hilde 381]

17 minutes ago, pushbrk said:

Since you submitted a joint sponsor's package to NVC, it doesn't matter what was requested at the interview.  Joint sponsor is still on the hook.

 

I didn't submit the joint sponsor to NVC. I had it as a backup for the interview but ended up not using it, since they accepted my updated 864 (which included the 401k info)

[pushbrk 12,105]

Just now, Hilde said:

I didn't submit the joint sponsor to NVC. I had it as a backup for the interview but ended up not using it, since they accepted my updated 864 (which included the 401k info)

Got it.  Great.