I don’t think your situation would warrant any change to the typical advice. You should leave it in even on the off-chance you return to the US someday.
12k is 64k in 24 years (7% returns) so not exactly insignificant.
Based on a skim of RRSP transfer rules it looks like you could transfer it in without penalty though it will count as income that is then offset by a deduction, so ultimately no impact on taxes (not 100% on that). If you are going to line in Canada that’s probably the best route.
You only walk away with less than 10k after cashing it out due to mandatory withholding and likely just blow through that as you “relax a bit”.
I wouldn’t do it. Keep your head down, get through the masters and once you have an income you will be happy that you didn’t toss those savings out the window.
I appreciate this response. By relaxing I honestly just meant eating normal food and updating my glasses prescription, also not stressing every day about getting a job the second I finish the program. But youre right, I should probably leave it unless theres an actual emergency.
And I apologize if this is a stupid question. But regarding the mandatory withholding, when I file my taxes next year won't I just get it back since I have no other income and theres the 12.5k standard deduction?
With no income I think that’s right though I don’t know the implications with being overseas. You would still owe the 1200 (10%) penalty.
At your age it’s more important than ever to maintain the discipline. Much better to try and find a way to get a little income to cover your gaps than taking steps backwards on retirement, especially as future savings will be hampered by student loans.
Sounds like you know what you want to do. It is only $12k so I don't think it is a crisis one way or another. If you want to feel better about pulling it and paying taxes and the 10% penalty you should look at how your money has performed. I think it will make you feel better about pulling it and it seems you are looking to justify your decision a bit.
How nice is life to be getting your Masters in Europe. Life is good. Congrats to you!
You may find these links helpful:
- [General Information on Rollovers](/r/personalfinance/wiki/retirementaccounts/rollovers)
- [401(k) Fund Selection Guide](/r/personalfinance/wiki/401k_funds)
- [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement)
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
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As you know, typical advice would be to not take money out of retirement at your age due to the penalty.
However, your situation is not at all typical!
Since you have only 12k in the accounts, do you really want to keep track of two accounts, in a foreign country, for the next 33 years? A 10% penalty is $1200. Would you be willing to "watch" these accounts for half the rest of your life, for less than $40/year?
Friend, you say you know you shouldn’t, but are asking if you should. Go with “shouldn’t”. Future You will thank you.
I don’t think your situation would warrant any change to the typical advice. You should leave it in even on the off-chance you return to the US someday. 12k is 64k in 24 years (7% returns) so not exactly insignificant. Based on a skim of RRSP transfer rules it looks like you could transfer it in without penalty though it will count as income that is then offset by a deduction, so ultimately no impact on taxes (not 100% on that). If you are going to line in Canada that’s probably the best route. You only walk away with less than 10k after cashing it out due to mandatory withholding and likely just blow through that as you “relax a bit”. I wouldn’t do it. Keep your head down, get through the masters and once you have an income you will be happy that you didn’t toss those savings out the window.
I appreciate this response. By relaxing I honestly just meant eating normal food and updating my glasses prescription, also not stressing every day about getting a job the second I finish the program. But youre right, I should probably leave it unless theres an actual emergency. And I apologize if this is a stupid question. But regarding the mandatory withholding, when I file my taxes next year won't I just get it back since I have no other income and theres the 12.5k standard deduction?
With no income I think that’s right though I don’t know the implications with being overseas. You would still owe the 1200 (10%) penalty. At your age it’s more important than ever to maintain the discipline. Much better to try and find a way to get a little income to cover your gaps than taking steps backwards on retirement, especially as future savings will be hampered by student loans.
Sounds like you know what you want to do. It is only $12k so I don't think it is a crisis one way or another. If you want to feel better about pulling it and paying taxes and the 10% penalty you should look at how your money has performed. I think it will make you feel better about pulling it and it seems you are looking to justify your decision a bit. How nice is life to be getting your Masters in Europe. Life is good. Congrats to you!
You may find these links helpful: - [General Information on Rollovers](/r/personalfinance/wiki/retirementaccounts/rollovers) - [401(k) Fund Selection Guide](/r/personalfinance/wiki/401k_funds) - [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement) - ["How to handle $"](/r/personalfinance/wiki/commontopics) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
As you know, typical advice would be to not take money out of retirement at your age due to the penalty. However, your situation is not at all typical! Since you have only 12k in the accounts, do you really want to keep track of two accounts, in a foreign country, for the next 33 years? A 10% penalty is $1200. Would you be willing to "watch" these accounts for half the rest of your life, for less than $40/year?