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long time US resident moving back to the UK

long time US resident moving back to the UK

Old Aug 26th 2023, 8:22 pm
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Default long time US resident moving back to the UK

I posted this in the wrong forum originally...but... I am US/Brit dual citizen, 25yrs living in the States, originally from UK. Planning to move back to the UK in 18-24 months time. Lots of financial/legal/immigration complexities to figure out - 401ks, 529s, visas for family etc. Looking for someone in Los Angeles (pref. Westside) who can provide professional advise with expertise on both countries. Any recommendations?

Family situation, 1 child (dual), 1 wife (US cit.) - will need a visa for her.

Not sure if our move is forever, planning on keeping and renting out our LA house.

Would love any advice on folks who've done this or are familiar with the process. Also, are there things I can do now, that will help me with the process, or with resettling back in the UK in 2yrs time?

thanks!
-m
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Old Aug 27th 2023, 8:09 pm
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Default Re: long time US resident moving back to the UK

I can’t help with the visa side of things and I don’t know how HMRC will treat the 529. The 401k will be protected by the pension wrapper and not taxable until distributions are taken. However I don’t know how easily you will be able to manage it from overseas so you will want to check that out. Myself, my wife and my son rolled our 401ks into an IRA with a major brokerage firm that has good access from overseas. This rollover is a non taxable event.

If you have taxable investments then that is fine except they will get better tax treatment if they are invested in HMRC reporting funds. (Google this)
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Old Aug 27th 2023, 9:34 pm
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Default Re: long time US resident moving back to the UK

thanks! Some good news on the 401k - appreciate you replying!! Yes, I think we will likely look at rolling our 401ks into a regular IRA - we have a brokerage account with Vanguard, so i'll see if they are cool with us living overseas. Most of my investments I do on large index funds, like s&p 500, so I think I could find HMRC reporting fund versions of those.

Happy to take any advice from anyone on any of this stuff, big or small - anyone out there lived in the UK with a US home rented out that can comment on that? OR how to best deal with a 529?

Are there things we should do in the UK on our next trip over that might help get the ball rolling for future move?
thanks,
-M
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Old Aug 28th 2023, 12:55 am
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Default Re: long time US resident moving back to the UK

You’ll need a spouse visa for your wife. The main consideration is how you plan on meeting the financial requirement.

More information is available on the wiki: https://britishexpats.com/wiki/Spouse_Immigration-UK
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Old Aug 28th 2023, 1:09 am
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Default Re: long time US resident moving back to the UK

thanks - we're not sure if we'll have jobs to go to in the UK as yet, and given a job offer could be rescinded, it looks like the straight savings if probably our best bet.

Any idea about application period/turn around? Ideally, obviously, it'd be great to have the visa granted, and we all move together. Is it possible to apply...lets say 9 months before the intended move date, get the visa, and hold it until that date?

-m
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Old Aug 28th 2023, 7:49 am
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Default Re: long time US resident moving back to the UK

Originally Posted by mmhendrie
thanks! Some good news on the 401k - appreciate you replying!! Yes, I think we will likely look at rolling our 401ks into a regular IRA - we have a brokerage account with Vanguard, so i'll see if they are cool with us living overseas. Most of my investments I do on large index funds, like s&p 500, so I think I could find HMRC reporting fund versions of those.

Happy to take any advice from anyone on any of this stuff, big or small - anyone out there lived in the UK with a US home rented out that can comment on that? OR how to best deal with a 529?

Are there things we should do in the UK on our next trip over that might help get the ball rolling for future move?
thanks,
-M
Vanguard is what we use and they handle overseas customers just fine. Not only do they accept UK phone numbers for 2FA they also accept Face ID for validation plus their app works for overseas users as well. Earlier this year my daughter received a 7 figure check in USD from a class action lawsuit and wondered how she was going to deposit it as she lives here in England as well. A quick look told me that Vanguard does mobile check deposits using their app up to $500,000 so she downloaded the app and made the check deposit easy as you like.

Vanguard also has ETF versions of their index funds like the S&P 500, all of which are HMRC reporting so I converted ours before we moved back, and these are non-taxable events. It is only funds with a mix of stocks and bonds that don’t have ETF equivalents where HMRC will treat all dividends as regular income. (The dividends from those funds will have some “qualified” portion of those dividends that the IRS treat as stock dividends)
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Old Aug 29th 2023, 3:12 am
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Default Re: long time US resident moving back to the UK

Question on the 401k to IRA conversion. Did you look at all at doing a mega backdoor Roth IRA conversion at all? My understanding is that you would pay taxes at the initial conversion (while still a US resident, paying the lower US tax rate), then maintain the Roth IRA after becoming a UK resident, and withdrawals from the account are then tax free (skipping the higher UK rate) under the US-UK tax treaty? - At least that's my understanding of how it would work....

-m
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Old Aug 29th 2023, 7:38 am
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Default Re: long time US resident moving back to the UK

Originally Posted by mmhendrie
thanks - we're not sure if we'll have jobs to go to in the UK as yet, and given a job offer could be rescinded, it looks like the straight savings if probably our best bet.

Any idea about application period/turn around? Ideally, obviously, it'd be great to have the visa granted, and we all move together. Is it possible to apply...lets say 9 months before the intended move date, get the visa, and hold it until that date?

-m
When we applied for my US born wife’s visa to move to the UK it probably took around two months to get the visa. We were then given 90 days to leave the US on that visa or otherwise have to go through the whole process & cost implications for reapplying again. Once we had the visa we just went into overdrive, picked a date to leave, sold stuff we weren’t bringing with us, giving stuff away to charity etc. shipping companies to pack the stuff we were bringing with us. Good luck.
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Old Aug 29th 2023, 7:46 am
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Default Re: long time US resident moving back to the UK

Originally Posted by durham_lad
Vanguard is what we use and they handle overseas customers just fine. Not only do they accept UK phone numbers for 2FA they also accept Face ID for validation plus their app works for overseas users as well. Earlier this year my daughter received a 7 figure check in USD from a class action lawsuit and wondered how she was going to deposit it as she lives here in England as well. A quick look told me that Vanguard does mobile check deposits using their app up to $500,000 so she downloaded the app and made the check deposit easy as you like.

Vanguard also has ETF versions of their index funds like the S&P 500, all of which are HMRC reporting so I converted ours before we moved back, and these are non-taxable events. It is only funds with a mix of stocks and bonds that don’t have ETF equivalents where HMRC will treat all dividends as regular income. (The dividends from those funds will have some “qualified” portion of those dividends that the IRS treat as stock dividends)
Hi Durham_lad, you mention Vanguard. I have a bank account in the US, can I open an account with Vanguard & transfer money from the US to the UK?
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Old Aug 29th 2023, 10:56 am
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Default Re: long time US resident moving back to the UK

Originally Posted by Nypool1e
Hi Durham_lad, you mention Vanguard. I have a bank account in the US, can I open an account with Vanguard & transfer money from the US to the UK?
I either transfer money from Vanguard to my US bank and then use Wise to send that money to my UK bank or I send money from Vanguard directly to my US Wise account then transfer it to my UK bank account. For a while it looked like my US bank was closing all of its checking accounts so I opened a Wise account denominated in USD and registered that account with Vanguard so I have a choice of which one to use.
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Old Aug 29th 2023, 11:02 am
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Default Re: long time US resident moving back to the UK

Originally Posted by mmhendrie
Question on the 401k to IRA conversion. Did you look at all at doing a mega backdoor Roth IRA conversion at all? My understanding is that you would pay taxes at the initial conversion (while still a US resident, paying the lower US tax rate), then maintain the Roth IRA after becoming a UK resident, and withdrawals from the account are then tax free (skipping the higher UK rate) under the US-UK tax treaty? - At least that's my understanding of how it would work....

-m
The year I retired at age 55 I converted the whole of my 401k to a Rollover IRA, a non taxable event. The following year I started doing Roth conversions so that after 10 years it was all converted to a Roth. With an IRA to Roth IRA conversion you can convert as much or as little as you want, there are no limits unlike Roth contributions. Lump sum withdrawals are tax free in the UK so you could do what you suggest if you are already living in the UK and only pay US taxes on the IRA to Roth conversion.

The Roth is tax free in both the USA and UK and I have made tax free Roth withdrawals since living in the UK.
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Old Aug 29th 2023, 5:30 pm
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Default Re: long time US resident moving back to the UK

Thank you durham_lad.
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Old Aug 30th 2023, 3:25 am
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Default Re: long time US resident moving back to the UK

Originally Posted by durham_lad
The year I retired at age 55 I converted the whole of my 401k to a Rollover IRA, a non taxable event. The following year I started doing Roth conversions so that after 10 years it was all converted to a Roth. With an IRA to Roth IRA conversion you can convert as much or as little as you want, there are no limits unlike Roth contributions. Lump sum withdrawals are tax free in the UK so you could do what you suggest if you are already living in the UK and only pay US taxes on the IRA to Roth conversion.

The Roth is tax free in both the USA and UK and I have made tax free Roth withdrawals since living in the UK.
Were you able to go the Roth conversion(s) while living in the UK, or did that have to be done before you left the US?
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Old Aug 30th 2023, 7:34 am
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Default Re: long time US resident moving back to the UK

Originally Posted by mmhendrie
Were you able to go the Roth conversion(s) while living in the UK, or did that have to be done before you left the US?
-m
I was able to make some while in the UK. Lump sum conversion from my IRA one year, lump sum from my wife’s the year after.
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Old Aug 30th 2023, 3:28 pm
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Default Re: long time US resident moving back to the UK

Originally Posted by durham_lad
I was able to make some while in the UK. Lump sum conversion from my IRA one year, lump sum from my wife’s the year after.
ok - that's interesting. I don't suppose you remember how you were taxed on the converted portions that occurred after you became a UK resident? Was it UK income tax, or US? If it was US...did you have to pay State income tax...as at that point you wouldn't have been a resident of any state? I'm in CA, which has super high income tax rates, so that could be a significant factor for me.

-M
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