Tax on Government pensions

I am a US/UK dual citizen and have 457, 403b accounts and a defined benefit pension from working for the state of Massachusetts. When I move back to the UK permanently how will they be taxed? Is the 457 treated differently from the other retirement plans?

Also if I was to receive a UK Government pension would that be only taxable in the UK? IRS publications 901 seems to say that is so http://www.irs.gov/pub/irs-pdf/p901.pdf and in fact states for just about all countries that their pensions are exempt from US tax unless the recipient is both a US citizen and resident, this contradicts the Tax Treaty. So would I follow publication 901 and simply leave the UK pension off my 1040, but there is no justification for what is said about UK Government pensions in 901 in the treaty so a how can it be supported by an 8833, or should I follow the treaty and pay UK tax and claim a tax credit.....that would seem to be the safer option.

I don't think Pub 901 contradicts the Tax Treaty at all. A UK government pension is covered under Article 19.

I don't think Pub 901 contradicts the Tax Treaty at all. A UK government pension is covered under Article 19.

That's not how I see it, 901 says that if I'm a US citizen and if I'm not US resident then my UK Government is free of US tax. That's not how I read the Treaty.

My current thinking is that the UK Government pension, and MA 403b and defined benefit pension are covered by Article 19, but being a US/UK dual citizen resident in the UK means that they are taxable in the UK and the US and I will have to use foreign tax credits and Article 23 to avoid double taxation.

The 457 is not a qualified pension plan under the treaty and will also be taxed in both the UK and the US. The bigger issue with that is that is whether it qualifies for current tax deferral of gains in the UK.

From Pub 901:

Pensions paid by, or funds created by, the
United Kingdom, its political subdivisions, or lo-
cal authorities for services performed for the
United Kingdom are exempt from U.S. income
tax unless the recipient is both a resident and
citizen of the United States.

Article 19, Paragraph 2

a) any pension paid by, or out of funds created by, a Contracting State of a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall, subject to the provisions of sub-paragraph b) of this paragraph, be taxable only in that State;

b) such pension, however, shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State

I don't have a clue about the MA 403B or the 457, but if you have a UK government pension, it seems very specific - taxable in the Contracting State per paragraph a; taxable in the 'other state' only if a resident or a national of that state. This does not apply to our tax situation, so really I don't care, but I am curious what you are reading that I am not.

I don't have a clue about the MA 403B or the 457, but if you have a UK government pension, it seems very specific - taxable in the Contracting State per paragraph a; taxable in the 'other state' only if a resident or a national of that state. This does not apply to our tax situation, so really I don't care, but I am curious what you are reading that I am not.

I agree about the interpretation of Article 19, but there is the Saving Clause and the exemptions to it in Article 1 to be factor in as well.

Don't "awfulize it". Publication 901 is an official document from the IRS, and surely may be relied on. Whether you think it contradicts the treaty seems irrelevant.

vadio - relying on current IRS Pubs may not be strong enough to demonstrate a reasonable basis.

The Vienna Convention on the Law of Treaties states that the language of treaties, like that of any law or contract, must be interpreted when the wording does not seem clear or it is not immediately apparent how it should be applied in a perhaps unforeseen circumstance.

The Vienna Convention states that treaties are to be interpreted “in good faith” according to the “ordinary meaning given to the terms of the treaty in their context and in the light of its object and purpose”.

You would need to find supportable documents giving light to context, object and purpose from when the treaty was negotiated.

vadio - relying on current IRS Pubs may not be strong enough to demonstrate a reasonable basis.

This is what worries me. I don't think Pub 901 is supported by the treaty. I believe that the Treaty and the IRS code make any UK Government pension paid to me as a US/UK dual citizen, resident in the UK, taxable by the US. Pub 901 implies that a US citizen simply has to be non-US resident to avoid US tax on foreign Government pensions.

So here's a "strawman" for how I think I'll be taxed on my various pensions and SS as a US/UK dual citizen living in the UK. Please criticise and argue with me.

US Social Security - only UK taxable
UK Social Security - US and UK taxable as it is not a cross border payment
US MA state 403b - MA tax free, US and UK taxable
US MA state 401a - MA tax free US and UK taxable
US MA state 457 - this is a deferred compensation plan not explicitly covered in the treaty and I'm not sure it would qualify under the pension articles. I believe it would be taxable in both the US and the UK, but as it holds US investment funds UK reporting fund rules might be an issue - I'll avoid the issue by rolling it over to an IRA.
US ROTH IRA - no tax in UK or US
US IRA - US and UK taxable.

my 403b at Tiaa-cref is taxable in both jurisdictions, from teaching at public universities in 2 different states as is the one at Fidelity as a result of teaching at a private university (Fidelity). Is your different because limited to, or given through, MA?

my 403b at Tiaa-cref is taxable in both jurisdictions, from teaching at public universities in 2 different states as is the one at Fidelity as a result of teaching at a private university (Fidelity). Is your different because limited to, or given through, MA?

Qualified pension income, even payments from MA 401a, 403b and 457 plans, are not considered MA source income when paid to MA non-residents....if I was MA resident