Does this make sense?

Your spouse is the automatic beneficiary of the TSP account, but I would make sure you have filled out the beneficiary form anyway. There are no tax consequences when you die. When your spouse dies then her beneficiaries will have to deal with the issues around inherited 403b/401k/IRA etc.

So let's assume you leave the money in TSP and you die. Your wife gets those accounts and will withdraw from them as per Article 19 etc etc.

Your spouse is the automatic beneficiary of the TSP account, but I would make sure you have filled out the beneficiary form anyway. There are no tax consequences when you die. When your spouse dies then her beneficiaries will have to deal with the issues around inherited 403b/401k/IRA etc.

So let's assume you leave the money in TSP and you die. Your wife gets those accounts and will withdraw from them as per Article 19 etc etc.

Yep......and have to deal with the hassle of getting hold of that money.....and making sure the taxes get paid....to somebody. She would rather just have the money sitting there. It makes it simple.....for me as well. Again.....it comes back to those numbers.....only those numbers......they either work, or they don't. In my head.....they work. If somebody can point out a complete error in my thinking....that's what I need to hear. A friend of mine who is still teaching is making a butt-load of money (for a teacher).....way more than I made and his retirement will be a lot larger than mine.....but he leads a lifestyle that burns through money a lot faster than me. My numbers would not work for him.

Slight diversion here but F4  is saying that he is currently only getting 0.05% on £103,000.  While interest rates are in the toilet at present I  think he should be able to get 10 times that rate. (a whopping 0.5% better which would earn £515/year more).

We are currently in transition, moving to the UK permanently in January, in the process of buying a house etc. and I just have our money in various savings accounts in HSBC. We each have a savings account as follows:

Loyalty Cash ISA's paying 0.9% (£15,240/year per person can be saved in an ISA)
Online Bonus Saver paying 0.35%
Regular Saver paying 5% (this is limited to £3,000 each at £250/month max savings rate, pays out after 12 months then start again)

https://www.hsbc.co.uk/1/3/savings-accounts

When I look at those numbers for 2027, I ask myself this question....
Is this enough money for me/us to live very comfortably on?

Only you can answer that. Some are getting by on a pension of £20,000/year with £25,000 in the bank. Or less. Much less. You know the drill: spreadsheets, spreadsheets, and more spreadsheets. Or, pay for a financial advisor.

My thoughts were directed towards the consequences IF you were to take all the money out of the TSP account in the States and transferred it to the UK, and the consequences for your wife in that situation. I understand about your US SS, and now about your wife's children (so the kiddie/grand kiddie exemption will apply in her case). How you handle the US tax situation, married separately or married joint, each has its own outcome. Your decision.

I don't know what other assets you would still have in the States, but the view was if there was nothing left in the US aside from US SS, what would your wife face in that scenario. (I believe you are, in fact receiving other pension income from the US?) If any funds are left in the States, then she will have to deal with those anyway.

I'm trying to tease out a comment from the link from durhamlad. It involves case study 2. In the explanation it says: " She leaves the rest of her assets of £500,000 to her husband; these are exempt for IHT purposes." These funds are not from a home or assets left to children. The question is could these be jointly owned accounts, or does the fact that she may have stated in a will "all funds in my solely owned bank accounts goes to my husband" mean since it was in the will, it will be tax free to the surviving spouse (thinking of your potential assets in the UK). Or, is it because the total amount (if solely owned) is below £650,000 (the two tax free amounts added together).

So, we've two threads here: you wondering if there will be enough in 20 years time, and me wondering about the eventual consequences for your wife if that golf ball does find its target, and all assets are in the UK.

It's a topic that isn't discussed much here, but in theory it could affect a lot of people.

 

Slight diversion here but F4  is saying that he is currently only getting 0.05% on £103,000.  While interest rates are in the toilet at present I  think he should be able to get 10 times that rate. (a whopping 0.5% better which would earn £515/year more).

We are currently in transition, moving to the UK permanently in January, in the process of buying a house etc. and I just have our money in various savings accounts in HSBC. We each have a savings account as follows:

Loyalty Cash ISA's paying 0.9% (£15,240/year per person can be saved in an ISA)
Online Bonus Saver paying 0.35%
Regular Saver paying 5% (this is limited to £3,000 each at £250/month max savings rate, pays out after 12 months then start again)

https://www.hsbc.co.uk/1/3/savings-accounts

hehe- I'm not planning on keeping that money in the .05% account forever. After I sell off that ROTH in a month or so....that would give us £150K+ sitting here. We are going to move at least £50K of that over to something that gets closer to 1% for a year. I need to keep at least £66,000 in easy to get at accounts in the bank to make the visa people happy (I don't want to worry about proving my pension etc which would make that amount about £33K). I also need to start spreading it out anyway since at this time we only have the money at Lloyds....and their savings choices stink. Within 2 months we should have at least 1/3 of our money at another savings account somewhere else. Once I finish the visa process in 3+ years I can lock it up for a few years at a time getting better interest.

We have thought about my wife (and maybe me as well) putting £15K or so a year into an ISA......although the interest on that would have to be declared in the US as well wouldn't it?....especially if I am filing married/joint. It wouldn't come to much I wouldn't think so it wouldn't throw off the TSP withdrawal amount by much.

Do you see a big whole in my numbers? Does the plan "seem" to work? and make my wife more comfortable not having to worry about getting hold of that money at some point in the future? By the time I'm 70.......we just wouldn't have to worry about paying taxes to much of anybody......
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Damn....theOAP would add something confusing. Not sure how if we have all that money here it would be a tax issue to her. She wouldn't be inheriting anything since it would all be in both our names anyway. The kids getting money after we are both gone is not an issue for us.....it is for them.  Yeah.....the US pension would still be taxed....but that would be it. That would be the only thing that would need a possible tax return in the US. My SS would only be taxed in the UK although she would still need to get hold of them to make the changes.

So, we've two threads here: you wondering if there will be enough in 20 years time, and me wondering about the eventual consequences for your wife if that golf ball does find its target, and all assets are in the UK.

It's a topic that isn't discussed much here, but in theory it could affect a lot of people.

I think about this a lot. 

For example we have a life insurance policy on my life that hasn't cost anything in the past 3 years and is unlikely to cost anything ever as the current cash value of the policy should pay all fees until I die.  We took it out 13 years ago to cover the event that I should die well before her and she would lose 50% of my pension income. However we have been very fortunate, more pensions start paying out in 2017 and the chances of her actually needing the $500k payout are now very slim.  If we were still living in the USA then the Estate Tax would not be an issue with the current ~$5M limit, but if she were to collect this after my death once we have moved back to the UK then probably $200k of that $500k payout would go to IHT when she dies.  So we have changed the beneficiary from her to our 2 children.

Do you see a big whole in my numbers? Does the plan "seem" to work? and make my wife more comfortable not having to worry about getting hold of that money at some point in the future? By the time I'm 70.......we just wouldn't have to worry about paying taxes to much of anybody......
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I don't see a whole in your numbers at all, I don't even see a hole.  As I said early on I would be doing the same thing in your situation.

...... since it would all be in both our names anyway.

That's the key.......I think.

I don't see a whole in your numbers at all, I don't even see a hole.  As I said early on I would be doing the same thing in your situation.

And as a side point......it would only be the money that is an issue for my wife anyway. The house is already only in her name. No way will that £650K number in cash ever come close.......unless the Pound drops to about $.50 by next month. Not likely.

And....it just shows how I can miss something that I thought I understood.....I "assumed" that when I started taking money out of the TSP I had to wait until Open Season to apply for it. Then it hit me that that didn't really make sense.....Open Season is only for the health insurance etc related changes I think. I thought I would have to wait another year before I could apply for the monthly withdrawals I plan to use. But....I turn 59.5 in early January so I will likely put the paperwork in fairly soon....it will probably take a while for them to get around to starting things up anyway. 

Yep......and have to deal with the hassle of getting hold of that money.....and making sure the taxes get paid....to somebody. She would rather just have the money sitting there. It makes it simple.....for me as well. Again.....it comes back to those numbers.....only those numbers......they either work, or they don't. In my head.....they work. If somebody can point out a complete error in my thinking....that's what I need to hear. A friend of mine who is still teaching is making a butt-load of money (for a teacher).....way more than I made and his retirement will be a lot larger than mine.....but he leads a lifestyle that burns through money a lot faster than me. My numbers would not work for him.

This is really just a personal decision between you and your spouse. I see no massive issue with taking money from the TSP at age 59.5 so that it is easily available in the UK......If you do that I would use it to fund an ISA assuming your wife is not a US citizen. Leaving the money in the TSP will mean that taxes will have you be dealt with down the line, but if it was me I'd probably do that because of the low cost and good funds available. Only you can make this decision because the considerations are not purely financial.

Currently the surviving spouse receives the inheritance tax free, and his/her zero tax allowance doubles to £650k.

Not that I doubted you, but I've been delving deeper into this. I'd like to confirm the correctness of your statement above, at least for a couple with UK only situs assets, no children, and, importantly, both are domiciled in the UK.

WARNING: This is my understanding, and as always, may be totally wrong.

My thoughts were always the same as your conclusion, but I always had difficulty finding an exact statement when assets are passed outright. Most explanations make a general statement and are not precise as to the entire estate. I found this on one site:
"Married couples and civil partners are allowed to pass their estate to their spouse tax-free when they die. In other words, the surviving spouse can inherit the entire estate without having to pay Inheritance Tax." [bold mine]

https://www.moneyadviceservice.org.uk/en/articles/a-guide-to-inheritance-tax

We had a previous post that gave a simple make believe scenario, so let's expand it.

Case 1. Richard and Doreen have no children. Each have made a will leaving all their 'worldly goods' to the surviving spouse. 

1. A home, valued at £900,000.
2. Joint bank accounts totalling £100,000.
3. Richard's solely owned bank accounts of £500,000.
4. Richard's car worth £5,000, and assorted personal items worth £7,000.
5. Jointly owned household items total £9,000
6 Richard's (DB) pension paying £6,000/ month. Doreen will receive 50% of the pension going forward after the Richard's death. Richard's US SS benefit paying £600/month for which Doreen would receive 100% (or the pre-WEP amount if WEP was applied).

Doreen, I believe, would receive all items (1,2,3,4,5,&6) free of UK IHT. Her estate, upon her death, would also have her original £325,000 NRB plus Richard's full NRB when she dies (total £650,000). Since there are no children, RNRB will not apply.

Case 2. Same as above, Richard's will leaves everything to Doreen but with the exception of £400,000 from his solely owned bank account being left to his sister Jane.

Doreen, I believe, would receive all items (1,2,4,5,&6) free of UK IHT. She would also receive £100,000 of item 3 (solely owned bank account) free of IHT. Jane would receive £400,000 from item 3. Richard's full NRB (£325,000) would go to cover this separate bequeath (it's not to a surviving spouse). IHT would be due on £75,000 of Jane's bequeath (400,000 - 325,000) at 40%.

Since Richard's full NRB has been used for Jane's bequeath, when Doreen dies, her only available NRB would be her original £325,000. If the value of the estate were to remain the exact same as at the time of Richard's death (minus the bequeath to Jane), it would be worth £1,121,000. I believe if Doreen leaves the full amount to her sister Charlotte, IHT would be due on £796,000 at 40 %.

Again, this is how I understand it, and it may well be wrong. I'm certainly open to any corrections (please).

I'll leave the fun part (inheritance to children) for others. For them, as well as others with assets in the US or more complicated estates I'll leave the following links:

US/UK Estate and Gift Tax Convention (the estate treaty)
http://uniset.ca/misc/us-uk1980.html

and durhamlad's previous link
https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band

and one person's general discussion of "The Basics of US Estate and UK Inheritance Tax"
http://www.buzzacott.co.uk/insights/the-basics-of-us-estate-and-uk-inheritance-tax

Yet another reason for me to get all of our money sent over here in the next 10 years or so (likely a little over to keep the taxes lower)........and sitting here in both names. No separate accounts. My wife (or myself) just gets whatever the other has when they die. Right now the house is only in my wife's name just to avoid possible US taxes in the future if we sell. The whole point of what I'm trying to do is to avoid your mentioned scenario, or even anything like it. I don't think we will have an issue since our money totals shouldn't get us into trouble. I just mentioned today to my wife that we really needed to sit down for an hour or so with me going through how she would get hold of everything/accounts/passwords etc. I had something a couple of years ago....but it's really out of date. Like you said though.....moving what's left along to the kids is a whole different pile of burning poo.

Slightly different angle about withdrawing my TSP. Just read through some of the application......they need my (and wife's) signature etc notarised. Any idea of what they would accept? Lot's of people here seem to be able to do it.....for here in the UK. I doubt that the TSP folks will take a notary from a teacher we know, although seems to work for here. Just go to a law firm? Getting to a US consulate is not so easy.
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Just found this online.....not an official site though....

Documents notarized by a notary public in the UK are perfectly acceptable in the United States. For some states, however, it is necessary to complete an additional step after the notarization. This step is known as ‘legalisation’ and involves submitting the document to the Foreign & Commonwealth Office so that they can attach an ‘apostille’. An apostille is a certificate confirming the signature and seal of the notary. A document notarized in the UK and bearing an apostille must be accepted in the United States as if it had been notarized there; this is because both the UK and the US are parties to the 1961 Hague Convention abolishing the requirement of legalisation for foreign public documents. Notaries in England and Wales can normally arrange the apostille as well as the notarization, and some notaries based in London are able to arrange this for you on a same-day or next-day basis.