Roth IRA Conversion while UK resident

You would hope, I agree, but for some reason, even for Roth conversions between accounts within a brokerage, some brokerages seem to interpret that as being different to an IRA rollover in terms of withholding. 

I have done IRA rollovers too, while living in the UK, in the way you describe and was never subject to withholding.  In topic 413, the IRS include Roths in the concept of a rollover - and they say that rollovers are tax free, except for a rollover to a Roth (a conversion).  That is possibly the difference causing the problem, an IRA to IRA rollover is not taxable, where a Roth conversion can be, so the withholding rules are different.  Or some brokerages have taken a conservative view and decided a conversion is the same as a distribution, regardless of how it is done.  And distributions are subject to withholding if you live outside the US.  That's not how I interpret the IRS guidance on retirement plan rollovers, but that doesn't make any difference of course!

I should add, my last post was not so much about whether withholding was warranted, but if it is unavoidable, I can at least make up the funds in the Roth and avoid a penalty.

I think that interpretation of yours is correct and you may be stuck with what the brokerage decides as regards withholding. Fortunately for us Vanguard does not even offer to make a withholding for tax payment.

Both types are considered distributions (rollovers and conversions), box 1 of the 1099-R is labeled “Gross distribution “ and box 7 is labeled “Distribution code(s)”. 

Hello durhamlad!
Many thanks for your very helpful postings on this topic.
Please clarify a couple of points if you would.

Did you make your IRA to Roth IRA conversions every year or once every two years?
If only every two years, why was this?

How did you report the IRA to Roth IRA conversion on your UK tax return to make sure it was not also subject to UK tax?
Was it necessary to add notes detailing the specific section of the UK/US tax treaty you were using to make the conversion free from UK tax?

Cheers!

Hello durhamlad!
Many thanks for your very helpful postings on this topic.
Please clarify a couple of points if you would.

Did you make your IRA to Roth IRA conversions every year or once every two years?
If only every two years, why was this?

How did you report the IRA to Roth IRA conversion on your UK tax return to make sure it was not also subject to UK tax?
Was it necessary to add notes detailing the specific section of the UK/US tax treaty you were using to make the conversion free from UK tax?

Cheers!

I did a Roth conversion for 3 consecutive years and now am totally Roth as I had been doing Partial Roth conversions since the year I retired, 2010.  It is only 3 of those years of HMRC returns that I have done Roth conversions.

 The amounts of the conversions were only ever stated in the “Other information” section 19 with the following wording. I’ve had my returns done by a tax pro and this is the language they used. I expected a reference to relevant section in the tax treaty but I guess HMRC are familiar with the treaty. Most of my income is from US pensions, reported in the foreign section of the HMRC return.

“During the 2019 calendar year, I converted a lump sum from my IRA Pension Fund to my Roth Pension Fund totalling  $xxxxx.xx. Since this is a lump sum from a US plan, it is subject to US tax only and exempt from UK tax and has therefore not been included in this return.“

Thanks for taking the time to give such a detailed reply durhamlad. This is exactly what I was looking for.

Cheers again!