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US to UK - Seeking Financial Advice

US to UK - Seeking Financial Advice

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Old Nov 10th 2018, 5:58 pm
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Default US to UK - Seeking Financial Advice

My wife and I are UK nationals who have been living in the US for 20 years. We are now also US citizens. My company is relocating me back to the UK in early 2019 and I'm looking for financial advice.

Some specific questions:

a) should we leave our investment portfolio in the US or move to UK?
b) what should I do with my 401K?
b) should I negotiate with my company to be continue to be paid in US dollars?
c) should we renounce our US citizenship to reduce our tax bill?

Looking for a financial advisor/CPA with experience of both US and UK tax codes.

Thanks.
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Old Nov 11th 2018, 4:13 pm
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Default Re: US to UK - Seeking Financial Advice

If your investment portfolio is in funds with a broker then you cannot invest that money in UK funds without the IRS treating them as PFICs and taxing them punitively. I decided to leave our funds with a US broker and also made sure that broker accepted an overseas address. Before moving over I exchanged the mutual funds into ETF’s that are “HMRC Reporting” so that the dividends from those equity funds receive the favorable HMRC dividend rates and that capital gains from the sale of shares from those funds also receive the HMRC capital gain rates.

I rolled over my 401k into an IRA with a broker that supports overseas customers. There is no tax impact in doing this. You may be happy with the investment choices in your 401k but need to think about what will happen when you eventually leave or retire from your company. Opening an IRA once you live overseas is near impossible.

i can’t comment on your other 2 questions. My wife and I are both dual UK/US citizens living in the UK and for the foreseeable future have no plans to renounce US citizenship. I have 2 US pensions paid in the US in $ and 2 much smaller UK pensions paid in the UK in £. We will also both have US SS and UK OAP in a few years.
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Old Nov 13th 2018, 2:22 am
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Default Re: US to UK - Seeking Financial Advice

We will be moving back to U.K next year after 15 years stateside and like you Durham Lad are both USUKC. We will have income from our work and we are aware that we will need to meet U.K and U.S filing requirements but wondered if anyone had found an accountant who could deal with both sides of this issue, or as I suspect if we will need to employ the services of 2 advisers experienced in each respective jurisdiction?
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Old Nov 13th 2018, 1:32 pm
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Default Re: US to UK - Seeking Financial Advice

Originally Posted by durham_lad View Post
If your investment portfolio is in funds with a broker then you cannot invest that money in UK funds without the IRS treating them as PFICs and taxing them punitively. I decided to leave our funds with a US broker and also made sure that broker accepted an overseas address. Before moving over I exchanged the mutual funds into ETF’s that are “HMRC Reporting” so that the dividends from those equity funds receive the favorable HMRC dividend rates and that capital gains from the sale of shares from those funds also receive the HMRC capital gain rates.

I rolled over my 401k into an IRA with a broker that supports overseas customers. There is no tax impact in doing this. You may be happy with the investment choices in your 401k but need to think about what will happen when you eventually leave or retire from your company. Opening an IRA once you live overseas is near impossible.

i can’t comment on your other 2 questions. My wife and I are both dual UK/US citizens living in the UK and for the foreseeable future have no plans to renounce US citizenship. I have 2 US pensions paid in the US in $ and 2 much smaller UK pensions paid in the UK in £. We will also both have US SS and UK OAP in a few years.
Hi Durham Lad,
Do you know if IRA distributions are subject to an automatic ‘withholding tax’ by the managed account broker while we’re retired living in the UK? We will be filing our 2018 US taxes in early 2019 as usual and we intend to include the withdrawal on our 1040 as income, but do so ourselves. We don’t want to be taxed twice!

We have 2 x Traditional IRA’s with Schwab, who accept our UK address, and the account is managed on-line. However we would like to start withdrawing some of the IRA funds now to include in our 2018 tax filing next year and transfer the withdrawal directly into our Schwab brokerage account. Next year my husband will have to make compulsory withdrawals anyway, but again it will be transferred directly to the brokerage account. I can’t seem to find any firm answer to this withholding or non-withholding, at least from our perspective. We are both US/UK citizens.

Any information on the compulsory withholding of tax would be most helpful.
Thank you, TM
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Old Nov 13th 2018, 3:28 pm
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Default Re: US to UK - Seeking Financial Advice

Originally Posted by TiaMaria57 View Post


Hi Durham Lad,
Do you know if IRA distributions are subject to an automatic ‘withholding tax’ by the managed account broker while we’re retired living in the UK? We will be filing our 2018 US taxes in early 2019 as usual and we intend to include the withdrawal on our 1040 as income, but do so ourselves. We don’t want to be taxed twice!

We have 2 x Traditional IRA’s with Schwab, who accept our UK address, and the account is managed on-line. However we would like to start withdrawing some of the IRA funds now to include in our 2018 tax filing next year and transfer the withdrawal directly into our Schwab brokerage account. Next year my husband will have to make compulsory withdrawals anyway, but again it will be transferred directly to the brokerage account. I can’t seem to find any firm answer to this withholding or non-withholding, at least from our perspective. We are both US/UK citizens.

Any information on the compulsory withholding of tax would be most helpful.
Thank you, TM
Speaking on behalf of myself and my wife who are both UK/USC's living in the UK then when taking money out of our IRA's we have not been required to make a mandatory withholding. We are with Vanguard and when we move money out of our IRAs to a Roth IRA, although it is a taxable event, we are always prompted to ask if we wish to make a tax withholding, and always decline that option. (We prefer to pay the tax on a Roth conversion using money from other sources).
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Old Nov 13th 2018, 8:15 pm
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Default Re: US to UK - Seeking Financial Advice

Originally Posted by durham_lad View Post
Speaking on behalf of myself and my wife who are both UK/USC's living in the UK then when taking money out of our IRA's we have not been required to make a mandatory withholding. We are with Vanguard and when we move money out of our IRAs to a Roth IRA, although it is a taxable event, we are always prompted to ask if we wish to make a tax withholding, and always decline that option. (We prefer to pay the tax on a Roth conversion using money from other sources).
Thank you for your reply Durham_Lad.
It appears from what you say that we will get the option of being asked whether we want the tax withholding at the time of the withdrawal. Like you, we will decline since we also prefer to pay the tax ourselves from other sources.
I appreciate your helpful answer. TM
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