US 401K, HK MPF and UK employer pension
May 1st 2024, 7:30 am
#31
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Joined: Jul 2002
Location: Dreich Alba
Posts: 12,015
Re: US 401K, HK MPF and UK employer pension
At the time I think I still had a US bank account, and I'm pretty sure that I had by that time opened a UK-based US dollar account. So, I'm not sure if it was paid into my US account and I subsequently transferred it, or whether it was paid into my UK-based USD account. The most likely scenario is that I was sent a USD cheque that I then paid into my UK-based USD account. (Bear in mind though that many UK-based banks will no longer negotiate American cheques, including Barclays).
What I can see (and remember) is that I only had to complete a tax return once. After that, even on occasions that TIAA deducted 30%, they eventually corrected the error and paid the deducted amount back a short time later. The best advice I can give you is to make withdrawals early in the year, so that any errors can hopefully be corrected by the provider during the same tax year. The problem I vaguely recall from the first time was that I withdrew money shortly before the end of the year and TIAA said they couldn'y pay me back because they were now (when I raised the problem) in the following tax year. I remember it was a very frustrating time and I spent many hours online and on the phone remonstrating, citing the dual taxation treaty, etc.
I just pulled one message from TIAA (I saved them all as pdf's). The problem I kept hitting was this: "Please note according to the tax treaty between the United States and the United Kingdom, we are required to withhold 30% from your gross distribution from your retirement account for lump sum cash withdrawals. For periodic payments we are required to withhold zero percent from the gross distributions." I could not convince them that withdrawing only a part of my holdings did NOT qualify as a "lump sum". Unfortunately, a periodic payment is also something different.
I've had an initial trawl through some records from the time and can't find a definitive answer. If I come across anything else I'll come back and post a more helpful answer.
May 1st 2024, 8:29 am
#32
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Joined: Feb 2024
Location: Scotland
Posts: 11
Re: US 401K, HK MPF and UK employer pension
https://www.irs.gov/individuals/inte...-living-abroad
May 1st 2024, 2:37 pm
#33
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Joined: Aug 2013
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Re: US 401K, HK MPF and UK employer pension
With the 401k it is entirely dependent on the provider. After I retired and still living in the USA I discovered that my 401k provider was awkward to deal and withdrawals were only available by them sending physical checks so I rolled the 401k into a Vanguard IRA, which had no tax implications but Vanguard had lower fees and a lot more funds available. However, my 401k provider would only send physical checks to me so I had to receive the paper check and immediately FedEx it to Vanguard. In contrast, my wife’s 401k provider was able to do an electronic rollover of her 401k directly into her Fidelity IRA.
May 4th 2024, 9:14 am
#34
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Thread Starter
Joined: Feb 2023
Posts: 106
Re: US 401K, HK MPF and UK employer pension
Yes, it works exactly like a US bank account. When filing US taxes there is a space on the 1040 for the bank details into which the refund will be paid and you simply enter your Wise bank routing number and account number.
With the 401k it is entirely dependent on the provider. After I retired and still living in the USA I discovered that my 401k provider was awkward to deal and withdrawals were only available by them sending physical checks so I rolled the 401k into a Vanguard IRA, which had no tax implications but Vanguard had lower fees and a lot more funds available. However, my 401k provider would only send physical checks to me so I had to receive the paper check and immediately FedEx it to Vanguard. In contrast, my wife’s 401k provider was able to do an electronic rollover of her 401k directly into her Fidelity IRA.
With the 401k it is entirely dependent on the provider. After I retired and still living in the USA I discovered that my 401k provider was awkward to deal and withdrawals were only available by them sending physical checks so I rolled the 401k into a Vanguard IRA, which had no tax implications but Vanguard had lower fees and a lot more funds available. However, my 401k provider would only send physical checks to me so I had to receive the paper check and immediately FedEx it to Vanguard. In contrast, my wife’s 401k provider was able to do an electronic rollover of her 401k directly into her Fidelity IRA.
H
May 5th 2024, 11:44 pm
#35
Forum Regular
Thread Starter
Joined: Feb 2023
Posts: 106
Re: US 401K, HK MPF and UK employer pension
Unfortunately, I don't remember the answer to that question. All of this happened starting 9 years ago, at a time when I was completely swamped at work. Additionally, the brain injury that led me to retire early means that I lost a lot of detail from memories from that time.
At the time I think I still had a US bank account, and I'm pretty sure that I had by that time opened a UK-based US dollar account. So, I'm not sure if it was paid into my US account and I subsequently transferred it, or whether it was paid into my UK-based USD account. The most likely scenario is that I was sent a USD cheque that I then paid into my UK-based USD account. (Bear in mind though that many UK-based banks will no longer negotiate American cheques, including Barclays).
What I can see (and remember) is that I only had to complete a tax return once. After that, even on occasions that TIAA deducted 30%, they eventually corrected the error and paid the deducted amount back a short time later. The best advice I can give you is to make withdrawals early in the year, so that any errors can hopefully be corrected by the provider during the same tax year. The problem I vaguely recall from the first time was that I withdrew money shortly before the end of the year and TIAA said they couldn'y pay me back because they were now (when I raised the problem) in the following tax year. I remember it was a very frustrating time and I spent many hours online and on the phone remonstrating, citing the dual taxation treaty, etc.
I just pulled one message from TIAA (I saved them all as pdf's). The problem I kept hitting was this: "Please note according to the tax treaty between the United States and the United Kingdom, we are required to withhold 30% from your gross distribution from your retirement account for lump sum cash withdrawals. For periodic payments we are required to withhold zero percent from the gross distributions." I could not convince them that withdrawing only a part of my holdings did NOT qualify as a "lump sum". Unfortunately, a periodic payment is also something different.
I've had an initial trawl through some records from the time and can't find a definitive answer. If I come across anything else I'll come back and post a more helpful answer.
At the time I think I still had a US bank account, and I'm pretty sure that I had by that time opened a UK-based US dollar account. So, I'm not sure if it was paid into my US account and I subsequently transferred it, or whether it was paid into my UK-based USD account. The most likely scenario is that I was sent a USD cheque that I then paid into my UK-based USD account. (Bear in mind though that many UK-based banks will no longer negotiate American cheques, including Barclays).
What I can see (and remember) is that I only had to complete a tax return once. After that, even on occasions that TIAA deducted 30%, they eventually corrected the error and paid the deducted amount back a short time later. The best advice I can give you is to make withdrawals early in the year, so that any errors can hopefully be corrected by the provider during the same tax year. The problem I vaguely recall from the first time was that I withdrew money shortly before the end of the year and TIAA said they couldn'y pay me back because they were now (when I raised the problem) in the following tax year. I remember it was a very frustrating time and I spent many hours online and on the phone remonstrating, citing the dual taxation treaty, etc.
I just pulled one message from TIAA (I saved them all as pdf's). The problem I kept hitting was this: "Please note according to the tax treaty between the United States and the United Kingdom, we are required to withhold 30% from your gross distribution from your retirement account for lump sum cash withdrawals. For periodic payments we are required to withhold zero percent from the gross distributions." I could not convince them that withdrawing only a part of my holdings did NOT qualify as a "lump sum". Unfortunately, a periodic payment is also something different.
I've had an initial trawl through some records from the time and can't find a definitive answer. If I come across anything else I'll come back and post a more helpful answer.
Many many thanks, dunroving. So, in summary, you pay 0 tax to the IRS, but need to fill in w8ben to the pension provider every 3 years. U just report the income and pay the tax to HMRC once per year and all the pension salary will be paid to your UK bank USD account (can they pay it with gbp?). Is it correct?
Really appreciate your help and answers. My friend now feels it is much easier than her thoughts. Thanks!
H
