calling UK tax folks

Got the call back from HRMC this afternoon. Again I have to say......a very pleasant experience. A very nice lady......and seemed fairly knowledgable. She said I did not need to do a Self Assessment......and wouldn't until my Social Security kicks in around 2020 (or whenever I take it) and sends me over the minimum tax threshold. When I mentioned we had a fair amount of money in Lloyds just collecting a tiny bit of interest.....she told be to check to see if it was taxed. If it was, I can put in a form to get that money back(form R40). The only thing she wasn't sure on was the TSP retirement money. Since it wasn't treated as a pension (she didn't think) and it was taxed as I withdraw it (in another 1.5 years).    Anybody know exactly how the TSP money will be treated? Seems like I asked that question a couple of years ago......

Thanks for the update. Good info.

I would think that the TSP might be treated like other retirement savings accounts (e.g. IRA and 401k) and the withdrawals taxed as a foreign pension. i.e. 90% of the withdrawals being UK taxable. (Assuming all of the TSP is tax-deferred, no after tax contributions).

However, the TSP is a government pension savings scheme so I may be totally wrong. (I may be wrong about how IRAs are treated as well)

I would think that the TSP might be treated like other retirement savings accounts (e.g. IRA and 401k) and the withdrawals taxed as a foreign pension. i.e. 90% of the withdrawals being UK taxable. (Assuming all of the TSP is tax-deferred, no after tax contributions). Yes, all of my TSP is tax deferred. They brought in the ROTH choice after I retired, and I don't think there was any other way to put money in other than straight from your pay. I think they take out 20% automatically when I eventually take monthly withdrawals (which I am hoping I will get some back on).

However, the TSP is a government pension savings scheme so I may be totally wrong. (I may be wrong about how IRAs are treated as well) I guess it wouldn't hurt to send a request to HMRC in writing to get an answer to this question.

The TSP is a defined contribution 401a plan and part of the Federal Employees Retirement System. It is therefore a US government pension as far as the treaty is concerned.

The TSP is a defined contribution 401a plan and part of the Federal Employees Retirement System. It is therefore a US government pension as far as the treaty is concerned.

Well.....if it is.....makes things pretty simple.....
1. My pension and TSP withdrawals would only be taxed in the US.....which makes figuring out how much to take out of the TSP easier to hopefully stay in a lower tax rate.
2. Social Security would only be taxed in the UK, which at todays exchange would put me less than £2,000 over the tax threshold. Of course if the Pound creeps back higher that could keep me at/close to the threshold. Still another 3 years until I need to worry about it.

With this plan I shouldn't have to worry about double taxation.....and reclaiming it on taxes etc. I like things being easy........

TSP is definitely a government retirement account.

I once worked for the US Government, but as a contractor so the 401k I got from the job is not a government pension. The clue is in the "401k" as that's for profit making businesses. Your TSP is a 401a which is usually offered by government organizations. My US state retirement pension is a 401a and so its a US government (or political subdivision) pension under the treaty.

Well....hopefully things are getting even simpler. I finally emailed the Edward Jones secretary to get my original date/amount of my ROTH deposit (to meet the 5 year rule). I had dumped just about all of our old paperwork for everything when we moved back to the UK.....should have kept a few things obviously. Nice lady...immediately sent that info back to me. I plan to sell off the ROTH as well in early January when I turn 59 1/2. I can't resist this low exchange rate. That would give us enough cash to go a good 10 years (between pension+social security) before I would have to touch my TSP. I do plan to tap my TSP when eligible in the next Open Season in 2017 (I miss it this year by 3 days)......just plan to suck off the interest from the G fund. Selling the ROTH will close my Vanguard account. At that point......I won't have to worry about UK taxes until I get social security in a few years. My taxes should at that point be so easy I won't have any trouble doing them. I might just treat myself to a new Titleist driver.......

Sounds like things are moving along nicely.  As you say, now is an excellent time to move over that Roth given the exchange rates.  We just had our offer accepted to buy a house in Guisborough so I've also been moving large chunks of money over.

In case anybody knows this.......when the rules say "when you turn 59 1/2".....does that mean I can immediately sell my ROTH after 3 January which is exactly on the half year, or do you have to wait until the end of the month or some such thing?

In case anybody knows this.......when the rules say "when you turn 59 1/2".....does that mean I can immediately sell my ROTH after 3 January which is exactly on the half year, or do you have to wait until the end of the month or some such thing?

I'm pretty sure you can withdraw it on the half year date.  The reason I'm saying this is that I have been receiving an early pension from my previous employer since retiring at age 55 and each year get a 1099-R showing the amount I received that year.  The year I turned 59.5 I received 2 1099-R's, one showing how much I had received up to age 59.5 and the other how much I'd received after that date.  I was confused at first when I got TWO 1099-R's as the sum of the 2 was correct for the whole year.  However closer examination showed that there was a different number in box 7.  The 1099-R prior to being 59.5 had the code 2 (Early distribution with exceptions) and afterwards code 7 (Normal distribution).  Subsequent years have had code 7 in that box.

Thanks....I was just planning on waiting until maybe 5 January just to make sure I was over by a couple of days. Of course.....the Pound could go zooming back up again......but I really really doubt it.

Thanks....I was just planning on waiting until maybe 5 January just to make sure I was over by a couple of days. Of course.....the Pound could go zooming back up again......but I really really doubt it.

Yes, I would wait until January 5th as well.  I don't see any possibility that something would happen between now and then to send the pound zooming back up again.  It may be up some, but there is more chance it will go down on some other Brexit/financial panic.

I have a feeling this question may be a bit silly... but here goes anyway.

It is very tempting to move larger amounts of USD over here to take advantage of the exchange rate, but the interest rates here are so low I'm not sure it makes sense to take money out of the higher yielding investments I have - where would/should I put the money once I have it in pounds?

No good answer that I know of. I "think" I will likely put some money into short term savings that get anywhere from .35% up to a little over .5%.....but I don't want to lock up our money for more than a year for such teeny amounts.....so we are probably moving money over to the amazing .35%......we'll be rich!!!! I have the second visa to apply for next summer....they like easy to get to cash.

The ISA world might be a possibility.....but only with smaller amounts of money. Great if you are trying to build your savings....but doesn't work for us.

Ah, so maybe my question wasn't so silly after all.  I wondered if I was missing something available here but, as I am a year and a half older than you are, I don't think the ISA world works for me either.

Oh yeah... and that second FLR-M is due in just under a year - oh joy!