Hello everyone. I've been newcomer link: http://talk.uk-yankee.com/index.php?topic=84644.0 [nonactive] because of my Inherited traditional IRA (I am a Non Resident Alien in the UK). I inherited the account a couple of years ago, and have taken the Required Minimum Distributions, which had 0% treaty withholding in the US and which I reported as foreign income on my UK tax returns.
Being concerned by the growing restrictions on holding US accounts outside of the US, I've decided to start taking larger amounts to mitigate the possibility of one day having to close the account and distribute all of the funds at once. I have been reading newcomer link: http://talk.uk-yankee.com/index.php?topic=88242.0 [nonactive] and newcomer link: http://talk.uk-yankee.com/index.php?topic=88942.0 [nonactive] , and I have found the insight and knowledge here to be extremely helpful and valuable.
I would just like to confirm that I have understood these discussions, and that for me (as an NRA with an Inherited IRA) the situation is as follows:
a). Distributions that are greater than the RMD still qualify for treaty benefits (0% withholding in US, with 90% of the amount being taxable as pension income in the UK). Should there be 30% US withholding this would be against the treaty, and can be reclaimed on my 1040NR (which I file anyway).
b). The size and frequency of distributions should not affect point a) unless they comprise the entire value of the account within a single tax year (which would be a lump sum with 30% US withholding).
Is this interpretation correct? What would happen to a final distribution that closed the account after years of RMDs (say of the last ten percent?) Would that also be a lump sum?
Thanks so much for any input.
