New Foreign Pension Rules - Catching Up
May 29th 2018, 4:52 pm
#1
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Joined: Oct 2015
Posts: 28
New Foreign Pension Rules - Catching Up
There you are, you've researched the rules for taxation of foreign pensions and are pretty happy you understand them. Then, lo and behold, some new legislation comes into force.
To recap, I'm a UK citizen, resident in the UK. I have a 401k in the USA and am nearly ready to start taking income from it. I've filed a W-8BEN form (or something) so that any partial withdrawals I take are only taxable in the UK. My plan is to use a variable withdrawal distribution as described on the Bogleheads forum - basically with the aim of emptying my 401k over about 20 years. I'd report the income to HMRC (the full 100%, not 90% because the rule's changed) on the foreign income SA page and pay any tax due. Bosh. Simples.
Now, I've just read about some legislation introduced in Sept 2017 (I think) which "aims to treat foreign pensions more like UK pensions" or something like that. I daresay there's been a discussion about this already, but I've been out of the loop for various reasons. So, could some kind soul please summarise for me what the significant changes are? I'm especially interested if it's now possible to take 25% tax free from a 401k, as per UK pension rules - and how that works if I don't take the 25% in one go.
I also have UK pensions to take as well in about 5 years, and they have their own tax free lump options. I'm not sure what the rules are with regard to multiple tax free lump sums from different pensions.
To recap, I'm a UK citizen, resident in the UK. I have a 401k in the USA and am nearly ready to start taking income from it. I've filed a W-8BEN form (or something) so that any partial withdrawals I take are only taxable in the UK. My plan is to use a variable withdrawal distribution as described on the Bogleheads forum - basically with the aim of emptying my 401k over about 20 years. I'd report the income to HMRC (the full 100%, not 90% because the rule's changed) on the foreign income SA page and pay any tax due. Bosh. Simples.
Now, I've just read about some legislation introduced in Sept 2017 (I think) which "aims to treat foreign pensions more like UK pensions" or something like that. I daresay there's been a discussion about this already, but I've been out of the loop for various reasons. So, could some kind soul please summarise for me what the significant changes are? I'm especially interested if it's now possible to take 25% tax free from a 401k, as per UK pension rules - and how that works if I don't take the 25% in one go.
I also have UK pensions to take as well in about 5 years, and they have their own tax free lump options. I'm not sure what the rules are with regard to multiple tax free lump sums from different pensions.
May 30th 2018, 6:07 pm
#2
Forum Regular
Joined: Nov 2016
Location: Rural BC
Posts: 256
Re: New Foreign Pension Rules - Catching Up
Tough issue you need to talk to a professional who is versed in tax implications for such pensions.
Jun 3rd 2018, 11:57 am
#3
Just Joined
Thread Starter
Joined: Oct 2015
Posts: 28
Re: New Foreign Pension Rules - Catching Up
Well, it wasn't a tough issue this time last year. You take all your 401k in one go and the US tax it. You take it in smaller chunks e.g. a bit each year, and the UK tax it. That was simple. I'm sure once someone explains the new rules (which may be pretty much the same as the old rules) it will still be simple. In my experience there are people on forums who encourage people to seek professional help, and I also know that, at least in one case, that person had his own US/UK tax business.
