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Posted Tue, 23 Jan 2024 11:18:58 GMT by
I am a 60 yr old UK resident looking to start drawing down a pension fund that was left in the USA from working there for a number of years. The pension fund was originally a 401K but following the acquisition of the company it was with in 2010 it was rolled over into a traditional IRA. From other posts on this forum I understand UK tax treatment of IRAs is different to 401K plans and drawdowns are treated as coming from savings investments and tax is liable on the "interest" received. For tax calculation purposes am I correct to assume the following: Value at time of the 401K rollover to the IRA was $ XXXXX No further contributions were made into the account from that date Current Value of the IRA is $ YYYY Interest received is $YYYY - $XXX Thankyou for your assistance with this enquiry
Posted Fri, 26 Jan 2024 10:20:48 GMT by HMRC Admin 25
Hi ndkdluk,
Payments made by the individual into an IRA, are made after tax relief is given to the individual by the employer.
Payments from this pension are taxable in the USA.
HMRC do not recognise IRA schemes as pensions, so for UK residents, they are taxed as income under the interest and declared as foreign interest on a tax return (SA106).
There is no US taxation if the pension is subject and liable to UK tax.
If US tax is withheld, then the individual, should seek a refund of this tax (file a form 1040NR).
HMRC will not give a credit for this tax against any UK tax charged on this income.
Thank you. 

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