I am a 30 year old, Cuban/American citizen, planning to move to Spain in the short term and become a Spanish citizen. I’ve been contributing to a Roth 401K and Roth IRA. I am looking for some indication of how those accounts are taxed at retirement age; my searches have given me a lot of mixed responses.
Not a tax professional, or financial advisor, but everyone I have spoken to about Roth financial instruments clearly state that it will be seen as an investment distribution similar to a pension. They do not recognize the Roth Rules and since you pay no US taxes on withdrawal…it is seen as capital gains and taxed accordingly at the progressive rate you land in. I have seem discussions about some 85/15 rule to offset some of the gain, but at the end of the day, unless you can provide an audit of principal deposit vs growth, you are going to be taxed either on the total distribution, or maybe 85% if you have a crafty tax rep.
That’s my take…and it really hit me hard!