401K... Please Help!!

I'm a US citizen and have been engaged for a year to a Brit... and we've decided to finally get the ball rolling.  I'm leaving my job, shipping what I can, etc... but I have one nagging question: what the hell am I doing with my 401K.  I made the decision (and yes, I've been fully warned against it) to withdraw the entirety of my 401K, as I have no savings to help with the move and the money would look nice in my account (thereby helping to ensure my ability to live without relying on public funds when in the UK); but I'm not sure whether it would be wiser to rollover the sum to a UK IRA.  Actually, I'm not even sure if I can do that.  I don't know anything about this stuff and any online articles might as well be written in Sanskrit.  Could someone please offer some advice?

I am not 100% certain, nor am I am expert, but I am PRETTY sure you cannot roll a US 401-K over into a UK account. I do know that if you cash out now, you're going to pay taxes on what you take out at your current tax rate PLUS an additional 10% penalty PLUS whatever you lose with the horrible exchange rate.  That could be a bigger hit than you're willing to take!

I've been looking at fee-for-service financial planners and found this lady who does expat stuff. I have not used her services, nor do I know her, but she might be someone to talk to about the 401-K stuff. http://www.kaplanfinancialadvisors.com/index.asp

Best of Luck!

Thanks so much, Courtney!!!  I'll check out the link tomorrow.  You know, they couldn't even help me at my investment company's help desk!!!

No prob. Keep us posted as to what you find out.

1. A US 401(k) cannot be rolled into a UK pension plan.  While the UK would not mind, the US only permits rollovers from US qualified plans to other US qualified plans.  Therefore the US will not permit a rollover to a foreign plan.

2. You will pay US taxes plus 10% penalty. However, if your income in 2006 is likely to be low then the regular rate on the withdrawal will also be low.

3. Do remember to save receipts for moving expenses, charitable donations of stuff donated to Goodwill etc when you leave.

4. Don't forget to figure out your UK tax status too since although you'll be UK resident you'll still be domiciled in the States.

Another two cents.  If you remit those funds to the UK, you may have to pay UK tax on them.  In my particular case, I remited a large amount of funds AFTER i moved to the UK.  I am therefore liable for the gains on those funds (after a set personal allowance the UK gives you).

Not saying this can't/shouldn't be done, just another thing to consider...

I'm a US citizen and have been engaged for a year to a Brit... and we've decided to finally get the ball rolling.  I'm leaving my job, shipping what I can, etc... but I have one nagging question: what the hell am I doing with my 401K.  I made the decision (and yes, I've been fully warned against it) to withdraw the entirety of my 401K, as I have no savings to help with the move and the money would look nice in my account (thereby helping to ensure my ability to live without relying on public funds when in the UK); but I'm not sure whether it would be wiser to rollover the sum to a UK IRA.  Actually, I'm not even sure if I can do that.  I don't know anything about this stuff and any online articles might as well be written in Sanskrit.  Could someone please offer some advice?

just to play devil's advocate, it might be better in the long-run to keep your money in the states in a Roth IRA. The dollar is so weak against the pound right now that bringing it over may be of much less value than you think. If you could keep it there for a while it might do you better in the long run.

good luck either way.

by the way - there was a previous thread  about applying for a UK bank account whilst in the states. as your fiancee will probably tell you it's not as easy to get a UK bank account as you'd think. if you can find a UK bank in the states, try and apply before coming over becaues it might be easier and more convenient to do. Try HSBC or Citibank, I'm sure there are others but can't think of them off the top of my head. (I'll try and find the thread and post it here for your reference.)

here's the thread i spoke of in previous post:

http://talk.uk-yankee.com/index.php?topic=20276.0

If I understand what you are saying, you want the funds in your 401(k) to demonstrate to the UK authorities that you can live here without recourse to public funds.  When we did my spousal visa app (my husband is the Brit) we just showed the US 401(k) statements as supporting documentation incuded with the app - the money is still in my US accounts. By providing the statements we showed we had funds we could draw on if needed, but thank goodness we haven't needed to draw on those funds.

HTH

Thanks to all... you guys have been so helpful.  Funny thing is we've known the route we'd take for over a year, and we're (meaning.. well, "I'm") nowehere near prepared.  I'm practically soiling my pants.  This entire process suddenly seems so... laborious.  But cross your fingers, all.  Ans thanks again!!!

I rolled my 401K over into an existing IRA and don't plan to do anything with it for the foreseeable future. Does anyone with any financial savvy know if you can roll an IRA over to a UK account? Maybe that would be away around it for Khalil.

Belindaloo - Guya answered your query in the middle of this set of forum entries.  You can't roll it over into a UK plan or else you trigger US tax.

Don't cash in your 401k, roll it over into an IRA or convert it to a Roth IRA, if you are young, and leave it in the US.
Don't use the money to subsize your move to the UK! You'll regret it.
Emigrating and getting married are stressful things and if anything should go wrong and
you return to the US you'll be glad you still have something in retirement. If everything works out
fantastically at 59 1/2 you can make withdrawls from you US accounts and have it deposited to you UK
account.