Never pay UK tax on your US retirement savings!!!!!??????

In another thread Marty stated that rollovers from traditional IRAs to ROTHs were UK tax free.
Buzzacotts and another couple of references also state this. If it is the case it would seem to be easy to arrange things so that a UK tax resident never pays any UK tax on their US retirement savings as the growth and distributions from a ROTH are definitely also UK tax free.
Depending on your tax bracket this could save the UK tax resident a lot of money......can anyone explain the reasoning behind the UK tax free status of tIRA to ROTH rollovers?

Are IRA's not counted as self managed private pensions so that all distributions from them count as pension income and are taxed only in the US as per Section 17 item 1?

Are IRA's not counted as self managed private pensions so that all distributions from them count as pension income and are taxed only in the US as per Section 17 item 1?

My understanding is that if you take regular income distributions from an IRA and are taxed on an arising basis in the UK you will pay UK tax on those distributions per Article 17.1. If you are a US citizen you'll also be liable to pay US tax on them.

In the case of the IRA to ROTH rollover the ruse seems to be the "lump sum" nature of the distribution which under Article 17.2....I don't understand what criteria HMRC uses to determine whether the IRA distribution is a lump sum....or the reason why any distribution from a non-UK pension would be treated as a tax free lump sum for UK tax purposes.

Nun, you are quite correct. 

I was thinking ahead of my own case as a USC resident in both US and UK, and trying to figure it out.

Nun, you are quite correct.  

I was thinking ahead of my own case as a USC resident in both US and UK, and trying to figure it out.

That's going to be my situation as a US/UK dual citizen resident in the UK. I'll be taxed on my worldwide income by both the US and the UK. I'll always have to pay US tax on my IRA distributions, but if I can avoid UK tax after I become UK resident simply by rolling them over to a ROTH it will make my life simpler and depending on my tax brackets might also save me a lot of tax. I was going to do IRA to ROTH rollovers before I leave the US as then UK tax on the rollovers isn't even a factor, but if I can do the same tax free rollovers after I move back to the UK that would be great.

I really want to understand the criteria HMRC uses to determine when a tIRA distribution is a tax free lump sum. The thing that puzzles me is that 17.2 is not exempt from the savings clause so HMRC can tax rollovers made by UK residents and there are rules that restrict/prevent the recycling of tax free lump sums back into another pension plan. Why don't they apply?

That's going to be my situation as a US/UK dual citizen resident in the UK. I'll be taxed on my worldwide income by both the US and the UK. I'll always have to pay US tax on my IRA distributions, but if I can avoid UK tax simply by rolling them over to a ROTH it will make my life simpler and depending on my tax brackets might also save me a lot of tax.

Same here, and it has me thinking about seriously increasing the amount of Roth conversions to do over the next 3 years to avoid as much UK tax as I sensibly can.

I have 3 smallish SEP-IRAs that are earning zilch, so am considering taking a lump sum in alternate years over the next 5 UK tax years. Since my only other income is US Social Security and miniscule interest, I'm well under the threshold for any US tax liability. So my question is/was, will I owe UK tax on 90% of the withdrawal.

I've read and read, starting with this: http://www.hmrc.gov.uk/manuals/dtmanual/dt19876a.htm
and my totally unprofessional opinion is no.

The big IRA is a different matter, and I'll just take the required minimum distribution. I should still be under the US tax threshold, but will of course pay UK tax.

I have 3 smallish SEP-IRAs that are earning zilch, so am considering taking a lump sum in alternate years over the next 5 UK tax years. Since my only other income is US Social Security and miniscule interest, I'm well under the threshold for any US tax liability. So my question is/was, will I owe UK tax on 90% of the withdrawal.

I've read and read, starting with this: http://www.hmrc.gov.uk/manuals/dtmanual/dt19876a.htm
and my totally unprofessional opinion is no.

The big IRA is a different matter, and I'll just take the required minimum distribution. I should still be under the US tax threshold, but will of course pay UK tax.

Why don't you just split the big IRA into a number of small IRAs. You'll still have to meet US minimum withdrawal requirements, but if HMRC considers the liquidation of the entire amount form one of those small IRAs as a "lump sum" you might not have to pay UK tax on it.....this all sounds very dubious to me. How exactly does HMRC decide what is a lump sum?

FYI a definition of "lump sum" is given in this discussion and it comes from "Britishamericantax" which is a good firm.

http://www.taxationweb.co.uk/forum/uk-tax-on-us-retirement-ira-t34553.html

But the question about whether splitting the IRA up would allow you to make more lump sum distributions is still unanswered and I'm still amazed that HMRC allows the lump sum distributions to go untaxed in the UK.

I have 401a, IRA, 403b and 457 plans. If I was to make a single withdrawal from the 401a in 2013, from m the IRA in 2014, the 403b in 2015, the 457 in 2016 and then start on the 401a again in 2017 and so on, could I still claim the UK tax free lump sum distribution. I'm taking distributions each year, but the distributions from each account are separated by 3 years.

Assuming you could actually do that, don't forget that once you hit 70 1/2 you're required to take a minimum distribution from each of your different kind of accounts - 403b, 401k, IRA - every year. (you could get around this by rolling them all over into IRA's. If you have more than one IRA (or 403b, etc), you don't have to take the RMD out of each of them. You can take the full amount of the RMD you owe on the total in the IRAs out of IRA-1, leaving IRA-2 untouched until the 3 year interval is up. Or similar scenarios)

Fortunately (or unfortunately) I have no other retirement accounts, as I either worked for tiny companies or was self-employed for most of my working life when I actually earned real money. I'll be 66 this year, so I'm rapidly approaching the time for the RMD to kick in. That's why I'm considering the LSD on the 3 small accounts. One I've held for years in a CD, which was fine at 6% interest, not so good at 0.3%. The total value is only about $4500, so no biggie. Another SEP-IRA went south big time after I took it in 2008. Last week it FINALLY got back up to the original deposit amount. The 3rd of the smaller IRAs may just attract some US tax, if I take the LSD, but not enough to be concerned about.