withdrawing from IRA/ROTH IRA when we retire in UK,after being away for 30 yrs

  hi,

can I ask for advise,

 My husband  and I hopefully will retire back to my home country, england, in 10 years.

I was born in england, left when I was 23, I have lived in usa for 19 years and became a citizen 12 years ago.
husband is canadian, he became a us citizen 12 years ago with me.
I worked for a total of 18 years in usa, now I am a home maker.
Husband still works full time, hopefully he will retire when he is 591/2 -60 yrs old.
so we have a while to go, I just would let some information if possible.

We would jopefully move back to england, my brother has a apartment attached to his home and has already said is ours if we want it, so we would have a home.

I have a roth ira, as well as a ira ( I rolled over my 401k when I quit my job)
husband has his company 401K and a roth IRA.
we aslo have stocks,bonds and mutual funds, from after tax dollars.
The amount in our 401k's/roths etc.
WE DO NOT HAVE COMPANY PENSIONS, ONLY IRAS/ROTHS IRA's.
opps, I forgot we also have a HSA, only a few thounds in this since it was only strarted this year.
also, I since I have 40 SS credits I would get SS, and Husband would get SS since he will have almost 30 years of work in usa.
Husband would roll his 401k into IRA once he is retried.

My question is...........how do we deal with withdrawing form our IRA'S and Roths if we live in the uk?
Would Fidelity wire monthly payments over to the Uk bank, then we pay the tax on a 1040 while in the uk,
do we have to pay tax on that money to the HMRC???
do you file a tax form with HMRC??

how are roths treated since they are funded with after tax funds???

what about our savings in our local bank, can they be wired over to uk bank, is this money taxed???

I know we will have to hire a us/uk tax advisor, but if any one can give some insight it would be really helpfull.

one last thing, if we are not residents in the us, but we are still citizens are we allowed to keep our stocks,mutual funds with fidelity???

Would it be to our advantage to renounce us citizenship? if so what would be do about filing us tax's for our IRA?
would we still get US SS , if we renounced
I only ask because I am not sure, sorry if it seems a silly question.

Its been my dream to go abck home one day, and its one of the main reasons I worked so hard, to make  good money and be able to save and invest it.
I hope its not a dream and we will be able to go back without suffering loss of a large amount of money.
My husband is also keen to live with my family, but I dont think he would been too keen if it meant his life savings were taxed in both countires.

its all very confusing, and like I said its very early days yet, anything can happen, but it would be nice to have some idea on how all this works.
thanks for any help

ps..sorry for the faces on my post, no idea how they got there.

I'm in a very similar situation to you having been born in the UK, lived in the US fro 25 years and I am contemplating retiring to the UK. Having retirement funds in the US and living in the UK makes things a bit complicated, but there are no unsurmountable problems. In my answers I will assume that you intend to reside permanently in the UK and will be taxed by HMRC on an arising basis.

My question is...........how do we deal with withdrawing form our IRA'S and Roths if we live in the uk?
Would Fidelity wire monthly payments over to the Uk bank, then we pay the tax on a 1040 while in the uk,
do we have to pay tax on that money to the HMRC???
do you file a tax form with HMRC??

You will ask your IRA administrator for a distribution in the usual way and they will withhold a minimum of 10% tax or 0% for the ROTH. You will have to set up your UK and US banking arrangements to you can do international wires from your US account to the UK.....Fidelity might do a direct transfer, I don't know about that.

As a UK resident the UK will have primary taxation authority over your IRA distributions so you must file a self assessment with HMRC and pay income tax on 90% of the IRA distribution.

how are roths treated since they are funded with after tax funds???

There will be no UK tax on the ROTH because the US/UK tax treaty allows it to be tax free in the UK.

what about our savings in our local bank, can they be wired over to uk bank, is this money taxed???

Saving can easily be wired, you just nees a SWIFT/IBAN number and account details. There will be no US or UK tax on bank savings that have already been taxed, but any interest is taxable.

one last thing, if we are not residents in the us, but we are still citizens are we allowed to keep our stocks,mutual funds with fidelity???

Yes you are allowed to keep them, but whether Fidelity will let you is another matter. Many US brokerages just don't want to deal with overseas customers and each has it's own policy.....so ask Fidelity. I do know that Vanguard have no problem with overseas customers as long as you opened the account as a US resident. Whether it is a good idea to own US mutual funds as a UK resident is another question. HMRC has rules about the taxation of foreign mutual funds and if you do keep money in US funds you should make sure they are "UK Reporting Funds" to avoid possible complications.

Would it be to our advantage to renounce us citizenship? if so what would be do about filing us tax's for our IRA?
would we still get US SS , if we renounced
I only ask because I am not sure, sorry if it seems a silly question.

Renouncing is a big move, but if you don't have any US family and don't plan on living in the US again it might be an option. If you renounced there would be no US tax on your IRAs. You'd file a W-8BEN with Fidelity and get the distributions US tax free. You would also still get SS.

 nun,

thanks for the great information,
what do you mean when you say "taxed by HMRC on an arising basis."

also, when you say IRA  DISTRIBUTION, do you mean just the monthly amount I will be withdrawing from my IRA, not a total distribution of everything.
I was planing on maybe $20,000 a year???
same amont for hubbie???
since my brother has already provided a home for us, I am thinking that may be a decent figure???just thinking out load.

since I am a uk citizen my healthcare will be NHS???
we would get private health care for hubbie.

last question, if we did renounce, and filed a W-8BEN , how would the us get the tax which was defered from our IRA....would we be taxed by the HMRC???
is the W-8BEN , filled each year or just once.
also, would we have to with withdraw all our money from fidelity if we renounced our citzenship.
we dont have any family here, its just the both of us, so that is something we would consider. ( I also throught you had to be a citizen to claim US SS).

I very much appreciate you time and thanks for the information.
 kinda sounds like a pain, but once its set up, hopefully it will be ok.

I can't answer your tax questions, but once your husband is granted a spouse visa allowing him to live in the UK he will be entitled to use the NHS.

what do you mean when you say "taxed by HMRC on an arising basis."

"arising basis" means HMRC would tax you on your worldwide income as it arises. Some people are taxed on a "remittance basis" meaning HMRC only taxes the money when it comes into the UK.

also, when you say IRA  DISTRIBUTION, do you mean just the monthly amount I will be withdrawing from my IRA, not a total distribution of everything.
I was planing on maybe $20,000 a year???
same amont for hubbie???
since my brother has already provided a home for us, I am thinking that may be a decent figure???just thinking out load.

Yes I mean the money you take out of the IRA....you will only be taxed on it when you take it out as income.

since I am a uk citizen my healthcare will be NHS???
we would get private health care for hubbie.

If you and your husband are both residents you will both get NHS care

last question, if we did renounce, and filed a W-8BEN , how would the us get the tax which was defered from our IRA....would we be taxed by the HMRC???

When you renounce you will have to file an 8854 from with IRS and make sure you are up to date with your US taxes. If your net worth is under $2M you probably won't have to do anything about your retirement accounts and just pay tax on income you take to HMRC.

is the W-8BEN , filled each year or just once.

I think it's just one

also, would we have to with withdraw all our money from fidelity if we renounced our citzenship.

That's something to ask Fidelity..

we dont have any family here, its just the both of us, so that is something we would consider. ( I also throught you had to be a citizen to claim US SS).

No there's no citizenship requirement to get SS

 
 thank a million nun,

lots of great information.

would I be correct in thinking that our money would be taxed on remittance???
since its the only money that we have, and it will be wired to the uk each month from our ira??? (brought into the uk ).
I dont think we have funds that arise? ...not sure its all in the bank or with fieldily.

no worries about the 2 million dollar net worth!!!!! I saved for years but not that much, (but that would be lovely  ).

I am getting confused with arise and remittance??? I will goggle.
thanks nun.

  just checked out the definitions...the penny just dropped!!!!

thanks agin

The OP states "opps, I forgot we also have a HSA, only a few thounds in this since it was only strarted this year."

As current rules stand you should be able to use your HSA for allowable expenses in the UK, check your HSA plan for specific rules.

Also, you can make withdrawals for NON-HSA allowable expenses. This may be important to you if you use the NHS, receive free prescriptions and other services such as physiotherapy, and do not foresee spending your HSA funds on allowable expenses in the UK. From www.hsacenter.com:

"If an individual is age 65 or older, regardless of whether the individual has been enrolled in Medicare, there is no penalty to withdraw funds from the HSA. As always, normal income taxes will apply if the distribution is not used for unreimbursed medical expenses (expenses not covered by the medical plan)."

Of course you may already know this, but it might be useful for other readers

How would HMRC tax HSAs? I can't imagine that their US tax deferred nature would be recognized by HMRC.

No idea, but the OP would still be filing US taxes? I'm much better at other things than taxes!

If it was me, I'd draw down the HSA while in the US and not have to worry about that issue.

 
  thank you very much for all the comments and great information.

Lots to think about , we have another 10 years to go, so who knows what what the rules will be then, but at least I have some kind of idea of whts is involved.
Sounds like it is not a easy process, but then again people move all over the world each day.
We will hire a professional us/uk tax advisor when the time is right.

thanks   for the Comments on hsa, probably if we did not use them in usa we would withdraw the funds, put in our bank and use the money in uk.

thanks again for the input.