Roth Conversion for Japanese Citizen

[Anonymous_Japan]

My Japanese spouse and I plan on retiring at age 50 and will likely move to Japan. Ideally we will live in Japan for less than 5-years but it maybe longer. No matter when we leave Japan it will be before 59.5 years old and therefore we won’t have access to the IRA’s without a penalty.

I was planning on doing Roth conversions while I am still considered a non-permanent resident and since conversion is not being remitted to Japan, I understand there would be no tax consequence in Japan.

I assume if my spouse did a Roth conversion, she would be liable to pay capital gains to the NTA which could be offset with a Foreign Tax Credit to the IRS, as we plan to continue to file MFJ. Does that sound correct?

Would it make more sense to have my wife do a Roth Conversion to balance out our income to keep us both in a lower tax bracket assuming the following:
-I stay past 5-years and become a permanent resident
-Japan does not have an equivalent filling status of MFJ
-The majority of our income in retirement is in my name
-We continue to do Roth Conversions

[Tom.Portland]

I came to this forum to learn about how Japan taxes (regular) IRAs. At my last visit to the tax office here in Japan, my first after becoming a permanent resident for tax purposes, I was told I must pay taxes both on the income in my IRA *and* a distribution I took last year. That, in a sense is taxing the same money twice. I have not been able to find any clear information on whether the tax office was right or not, but I decided to respond to your question with my story as a way of encouraging you to make sure you know how Japan will treat Roth distributions. Will they tax them? If Japan does tax them, would you be able to use that tax as a credit towards other taxes on your U.S. return (as U.S. does not tax Roth distributions). Would leaving them as regular IRAs be more tax efficient (has not worked out for me so far)? BTW, I'm going to start a new thread about regular IRA taxation in Japan.