Vanguard is the place for US expats.

nun- partially just depends on where you live as well. Where we currently live.....you need a car. We have a local store now since the end of December so that has really cut our mileage down. We average about 10k a year where we are but if we were sticking around I think that would drop to maybe 7-8K this year because of the local shop. A couple of trips to the other side of the state to see relatives (700-800 mile round trip) and then some golf during the summer. Even though we pay a little more with the new local store (2 mile round trip)....we just do it since it's easier than driving 30 miles round trip to Walmart. In the act of trying to sell my recumbent bike. Had it up on Craigslist but only had one inquiry, but I am putting it up again with a lower price. I do not want to ship it back to the UK. Don't think I will buy another one....and I have issues riding regular bikes. I do know that if I moved back to Harrogate I would NOT have a bike. The worst, most aggressive and rude drivers I have ever been around. I don't know how many times I thought I was about to die. But the car I would really like to buy they don't make anymore......I used to have one of the old Mini Clubman from around 1972 or so......really liked that car. It had almost nothing in the dashboard.......good simple car that you could throw crap in.

If you are retired and have planned your income sources it's possible to generate a lot of tax free income. The unfortunate thing if you are a US citizen resident in the UK is that you only get to use the lower tax free allowances or tax bands......and those tend to be in the US.

In the UK the first £10k of income is tax free, there is no tax on the first £11k of capital gains and the effective tax rate on dividends is 0% if you are a basic rate tax payer. You can also take a 25% tax free lump sum from a pension plan and the ISA offers tax free growth and income.

Being a US citizen gains in an ISA are taxed and the tax free nature of the 25% lump sum is debated, but as you can now take it as a series of payments over a number of years it looks less and less like a lump sum (which is never defined in the treaty anyway) and more like tax free periodic payments. In the US the personal exemption and standard deduction makes the first $10400 tax free, although circumstances and itemized deductions could push that up and you pay no tax on capital gains or dividends if you stay within the 15% tax bracket. You also have the ROTH which is tax free in the US and the UK.

So if you can just take $10400 in income and then get the rest of your money from capital gains, dividends and ROTH withdrawals you won't pay any tax in the US or the UK. That might not sound like much income, and if you start SS or UK state pension 0% taxable income threshold will probably be breached, but you can live well on not much money if you've managed to pay off things like mortgages and other debt. The other sink for money is a car, so if you stop commuting that saves a ton of money too.

Thanks to the great info from the good folks on this site I've been able to do some advance planning ahead of our move. (UK tax year 16 - 17)

I have private pensions which take me well in the 20% UK bracket, but my wife does not have any pensions.  We have now moved all our after-tax investments into her name (no cost just some paperwork) and by the time we move they will all be HMRC Reporting stock index ETF's.  All the bond funds are in our IRAs and ROTHs.  We have a substantial sum in I-Bonds which are tax-deferred and they are mostly in her name (the accumulated interest is taxable when the bonds are cashed in).

After the move all the extra money we need on top of my pensions will be drawn from her accounts to maximize her tax free allowance, and favorable taxation of stock dividends and cap gains.

I will make another ROTH conversion this year and next from my IRA, and once we are in the UK we can make some ROTH conversions of my wife's IRA up to the top of the UK 20% band.

.... and I thought I'd need Sudoko's and crosswords to keep the brain ticking over in my retirement.

Good info for me as well. As durhamlad has mentioned, I am planning on putting a fair amount of money into just my wife's name. We don't have anywhere near the amount of money he has coming in from pensions etc, but I will have most of that type of income so I am hoping putting cash + ISA type things in her name would be wise.  Maybe one bank account in my name, one in her name and a small one with joint (no interest) names? Even wondering if when buying a house it might be better to keep it in her name......hate to have the "Boris" issue get us at some point. We obviously will be updating our Wills as soon as we get back. I still need to get down to the IRS maybe next week to see what they say on separating my wife totally from the US tax system.

I will make another ROTH conversion this year and next from my IRA, and once we are in the UK we can make some ROTH conversions of my wife's IRA up to the top of the UK 20% band.

For your awareness, someone on this board got a statement from HMRC that Roth conversions are not UK taxable at all since the US-UK Treaty does not allow either country to tax payments between pension schemes registered in the other country.

For your awareness, someone on this board got a statement from HMRC that Roth conversions are not UK taxable at all since the US-UK Treaty does not allow either country to tax payments between pension schemes registered in the other country.

This is true. Transfers between recognized pension plans in one country are not taxable in the other country. But an IRA to ROTH conversion is taxable in the US.

A cross border pension transfer to a third country could well be taxable event because it is being made to a pension scheme not recognized under the US/UK tax treaty.

For your awareness, someone on this board got a statement from HMRC that Roth conversions are not UK taxable at all since the US-UK Treaty does not allow either country to tax payments between pension schemes registered in the other country.

This is true. Transfers between recognized pension plans in one country are not taxable in the other country. But an IRA to ROTH conversion is taxable in the US.

A cross border pension transfer to a third country could well be taxable event because it is being made to a pension scheme not recognized under the US/UK tax treaty.

This is great news.  I have yet to file a UK return, do you declare the conversion somewhere on the return and claim an exemption based on the treaty, or do you simply not declare it on the UK return? 

I realize that the conversions continue to be taxable in the US, and we have plenty of time (10 years) to get all of our IRA money converted to ROTH before the dreaded RMD's (which would be taxed at 40% for me in the UK under current tax rates).

I realize that the conversions continue to be taxable in the US, and we have plenty of time (10 years) to get all of our IRA money converted to ROTH before the dreaded RMD's (which would be taxed at 40% for me in the UK under current tax rates).

This is probably explained somewhere else, but I've not seen it before and I'd like to hear a bit more about it.  What are RMD's and would they impact 403B money as well as IRA?

This is probably explained somewhere else, but I've not seen it before and I'd like to hear a bit more about it.  What are RMD's and would they impact 403B money as well as IRA?

RMD's are Required Minimum Distributions.  The IRS is not going to let a person defer taxes indefinitely so starting at age 70.5 a % must be withdrawn and this % increases the older you get.

403(b)'s I believe are also included in RMD's for the same reason as IRA's and 401(k)'s.


http://www.investopedia.com/university/retirementplans/403b/403b3.asp

For implementing the RMDs, a 403(b) plan must ensure that either of the following occurs:


• Each participant will receive his or her entire interest (benefits) in the plan by the required beginning date (RBD), which is April 1 of the year following the calendar year he or she reaches age 70.5.
• Each participant will begin to receive regular periodic distributions by the RBD. The distributions are annual amounts calculated so that the participant's entire interest is distributed over his or her life expectancy or over the joint life expectancy of the participant and the designated beneficiary.

If an employee maintains more than one 403(b) account, the RMD for each account may be calculated separately for each account, or a combined amount may be distributed from one 403(b) account. This is similar to the Traditional IRA rules but is unlike qualified plan rules, whereby an employee who participates in more than one qualified plan must calculate and distribute the RMD for each plan separately.

Required Beginning Date
 Each participant must generally begin receiving RMDs by his or her RBD, which, as we mentioned above, is April 1 of the year following the calendar year he or she reaches age 70.5.

Below is a link to the rules on calculating how much must be withdrawn

http://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf

RMD's are Required Minimum Distributions.  The IRS is not going to let a person defer taxes indefinitely so starting at age 70.5 a % must be withdrawn and this % increases the older you get.

403(b)'s I believe are also included in RMD's for the same reason as IRA's and 401(k)'s.


http://www.investopedia.com/university/retirementplans/403b/403b3.asp

Ah yes, I have heard of this - just didn't recognize the acronym. 

Thank you for the explanation and the link! 

This is great news.  I have yet to file a UK return, do you declare the conversion somewhere on the return and claim an exemption based on the treaty, or do you simply not declare it on the UK return? 

I realize that the conversions continue to be taxable in the US, and we have plenty of time (10 years) to get all of our IRA money converted to ROTH before the dreaded RMD's (which would be taxed at 40% for me in the UK under current tax rates).

You don't even bother to include IRA to ROTH rollovers as income on your UK taxes because you are not taking any income or making a distribution. You could write something on the foreign pages and claim the treaty exemption.

You don't even bother to include IRA to ROTH rollovers as income on your UK taxes because you are not taking any income or making a distribution. You could write something on the foreign pages and claim the treaty exemption.

Good info, thanks nun :0

You don't even bother to include IRA to ROTH rollovers as income on your UK taxes because you are not taking any income or making a distribution. You could write something on the foreign pages and claim the treaty exemption.

You still need to decide annually if you wish to elect into the treaty and write relevant words on each annual UK tax return otherwise an IRA has no special treatment under UK law.

You still need to decide annually if you wish to elect into the treaty and write relevant words on each annual UK tax return otherwise an IRA has no special treatment under UK law.

Does treaty election have to be explicit or can it be implicit.

Explicit. (The US is different as Treasury Regs say that they do not need Form 8833 for every kind of possible claims.)

Explicit. (The US is different as Treasury Regs say that they do not need Form 8833 for every kind of possible claims.)

HMRC does not have a form for this explicit claiming of a treaty, so is submission of a W-8BEN to the pension administrator sufficient for HMRC.