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  • RE: UK tax implications for 401k pension withdrawal in the US

    Another question: is a Rollover IRA, (established by transferring assets from a company sponsored retirement scheme or in lieu of a monthly pension) treated differently than an Traditional IRA (established by tax deductible contributions from a wage earning individual)?
  • RE: UK tax implications for 401k pension withdrawal in the US

    As my post from 8 days ago has not been individually addressed, I have questions for clarification of other answers. In the US, an IRA account and it's earnings are not taxed until some or all of the value is distributed to the owner or beneficiary, when the distributions are taxed. When a UK individual inherits an IRA as a beneficiary are the IRA contents taxed at the time of inheritance, or, as in the US, when the contents are distributed? Am I correct in interpreting that if an inherited IRA is distributed as a lump sum, it is not taxed as interest? On the other hand, the entirety of a partial distribution will be taxed as interest. In either case, please confirm that US tax paid on this US sourced distribution eliminates or reduces the UK tax because of the double taxation treaty. Are distributions from an inherited Roth IRA treated the same as from a Roth IRA into which the owner has made after-tax contributions?
  • RE: UK tax implications for 401k pension withdrawal in the US

    Myself (US citizen and resident) and my wife (US and UK dual citizen and permanent US resident) each have US traditional IRAs, with the spouse as primary beneficiary. When the second to die happens, both IRAs will go to the contingent beneficiaries: 25% each to my wife 2 sisters (UK citizens and permanent residents). When those contingent beneficiaries take a distribution from these IRAs they will have a 30% US tax withheld. Will they then owe UK tax also? Is the answer the same if their distributions are taken as one lump sum as opposed to smaller distributions over 5 years? We have the opportunity to convert all or part of our IRAs to Roth IRAs, which involves paying US income tax on the converted amount. The distributions from the Roth IRAs are then tax free in the US. In that case will the UK contingent beneficiaries experience UK tax on Roth IRA distributions?