jbrown

Hello,

I've been through the various threads on BE about liquidation of US retirement funds upon returning to the UK. I have an account with TIAA-CREF with about $70k invested in liquid funds that are eligible for a lump-sum cash distribution. In the absence of options to transfer funds between US and UK retirement plans, I've elected to take a cash distribution of the full $70k *before* I return to the UK after April 6th 2012.

I know the question of whether to cash out is debatable and the general consensus is not to do it. However, $70k is not a large sum. Also, the USD-GBP exchange rate is favorable at present. Further, I aim to exploit the offset between the US and UK tax years to minimize the taxes due.

I will pay US income tax on the full distribution (taken between now and April). Upfront withholding by TIAA-CREF amounts to 20% federal, 7.75% Maryland, and the 10% early withdrawal penalty. The actual taxes due will then be resolved in my US 2012 filing, in early 2013. I believe this should minimize tax when compared to being a full-year US resident (earning additional income) or paying taxes for UK tax year 2012, which are substantially higher than US taxes, at least for 2012.

Have I missed anything important re: the offset between the US and UK tax years to be concerned about?

Thanks,

James