If not US Mutual Funds then what ??

Hello,
I have seen the previous posted advice to avoid (non-distributor status) Mutual Funds for investments remaining in US but I have some further specific questions where I would appreciate peoples insight. (forgive me any duplication, I have searched and not found or understood answers)

Our background is UKC born and USC naturalised, 60+ years old, married, returning to UK to retire.
I plan to leave my Traditional IRA and Roth IRA invested in the US to grow tax free after I move to UK - draw from them as & when needed and appropriate, with an annual roll-over (taxed) from Trad to Roth mindful of Tax brackets.

Does the advice to avoid Mutual Funds apply also to Mutual Funds (distributor status or not) within a Traditional IRA ?
How about Roth IRA and Mutual Funds - Roth IRA is Tax Free upon withdrawal so does HMRC care that it is invested in Mutual Funds (distributor status or not)? [Hmm, maybe when I take the withdrawal I have to report in UK the actual fund that it came from and maybe thats when HMRC cares ??]

If not Mutual Funds in US IRA retirement accounts then what all are the alternatives that sit fine with HMRC?
Options appear to be interest accounts (CD's, Money Market), individual company stock - but does anyone know how HMRC feels about Bonds (Corporate or Municipal)?
Anything else ?

In my non-retirement account I have a Life Insurance linked Annuity  - this is an umbrella account that provides tax-free growth, taxable only when funds are withdrawn -but it is invested in varous funds so am I right in assuming HMRC would not look favorably on this ?

Thanks for any insight you can give. We are not rich, just want to hold onto as much as we legally can.


John

You are already out of date because we no longer have distributor and non-distributor funds as these were replaced recently by reporting and non reporting funds.

A US annuity may be caught by the UKs personl portfolio bond rules.

An IRA can qualify for limited relief under the double tax treaty.

In essence you have a very very complex situation what with both countries taxing you globally under different sets of rules.

I strongly recommend professional help from a dual US/UK qualified adviser.

Bless your heart and Jolly good;
late yes but not too late, complex yes but getting simpler.

Complexity comes from 18 years of productive life here in the US, but I have no emotional attachment to any of these financial vehicles, simply a desire to maintain the best overall value for spending in retirement in UK. If it all moves to stock and cash equivalents for the best tax advantage then so be it.

So can anyone answer this; is keeping US Mutual Funds inside a US IRA just as inadvisable as in a non-retirement account when it comes to tax treatment by HMRC ?

Thanks again,
June and John

Bless your heart and Jolly good;
late yes but not too late, complex yes but getting simpler.

Complexity comes from 18 years of productive life here in the US, but I have no emotional attachment to any of these financial vehicles, simply a desire to maintain the best overall value for spending in retirement in UK. If it all moves to stock and cash equivalents for the best tax advantage then so be it.

So can anyone answer this; is keeping US Mutual Funds inside a US IRA just as inadvisable as in a non-retirement account when it comes to tax treatment by HMRC ?

Thanks again,
June and John

Hi JJ
I'm going to be in exactly the same situation as you in a few years, so here's what I'm thinking of doing. I'll tell you how I see it and then Guya can correct me, but I'll also echo what he said that it's probably best to get professional advice.

1) make sure you know what your residency status will be. If you are domiciled in the UK and ordinarily resident you'll be taxed differently than if you maintain residency in the US.
2) don't forget about US state taxes. In my case I plan to become ordinarily resident in the UK and get rid of my US state tax liability.
3) As far as ROTHs go I believe they are covered in the tax treaty and are tax free in the UK too
4) For my retirement accounts (IRA, 401k) etc I'm just going to leave them invested in US mutual and bond funds with my US investment company. Fidelity, Vanguard etc are set up so that you can do most transactions on the internet. Then I'll deal with the income tax in the US and UK when I make distributions at 59.5. I think the wrapper of a retirement account gets around the US mutual fund issues as far as the UK goes.
5) For after tax investments you're basically screwed, so I'm going to take those and just put then in either a US CD ladder or a UK high interest savings account or individual stocks. There are things like trusts and more complicated investment things, but I don't really understand them so I'm avoiding them.

J.J
FYI here is something I found on the HMRC website.

http://www.hmrc.gov.uk/cnr/res-dom-faqs.htm#e

look at the section "US investment and retirement accounts". The individual who asks the questions is a US citizen domiciled in the US who's been living in the UK for 10 years so the the issues with "remittance basis" would not apply for some one domiciled and ordinarily resident in the UK. However, I think the answers are clear and give a good starting point.

There are a limited number of charities that are both 501(c)(3) qualified in the US AND qualify for UK Gift Aid.

For larger amounts these are worth investigating.