Hi everyone, I've done a lot of reading on this subject and have come up with the following plan of attack for my first few years in the UK (I just moved from the US).
I'd appreciate anyone pointing out any holes/flaws in my plan:
- Rollover my US 401(k) into a Traditional IRA.
I believe this can be done without any tax consequences on either the UK/US side. Is that correct?
I've read the Traditional IRA account must have been opened before moving to the UK. I do have an account that meets that requirement, but am curious if it is true.
- Use the FTC method of filing US taxes to avoid double taxation.
All years (except maybe the first partial year?) should see a significant amount of excess tax credits.
I would then plan that for each year I would convert a portion of my Traditional IRA account to a ROTH IRA. This would be a taxable event in the US, but not a taxable event in the UK (correct?)
I would convert an amount of the Trad IRA -> ROTH IRA that would generate a tax liability in the US equivalent to my excess tax credits from the FTC. Thus it would in effect cost me nothing.
In effect, over several years, I would be able to convert all my current pre-tax US retirement accounts into post-tax US ROTH retirement accounts.
At withdrawal time, I could pull my conversion contributions (but not earnings?) from my ROTH - after a minimum of 5 years? - tax free in both the US and the UK.
This all sounds like a great way to make the high tax rates in the UK and turn them into something useful for my long-term finances.
What am I missing here, it this too good to be true?
Greatly appreciate anyones input on this!
