Cash withdrawal from US 403b - "effectively connected" income, or not?

Grrr, struggling with the 1040-NR to get back 30% withholding that TIAA incorrectly took out.

Recap: UK citizen and resident since 2006, trying to withdraw cash from my US 403b. 403b is from a job I did for 10 years while a US nonresident for immigration purposes (was on an H1b visa), but a US resident for tax purposes (i.e., I used to file the regular 1040).

1040-NR instructions say, "Effectively connected pension distributions. If you performed
services in the United States while you were a nonresident alien, your income generally is effectively connected with a U.S. trade or business" - so, I think that applies to my situation.

Later, the 1040 instuctions say, "In most cases, the effectively connected pension distribution will be fully taxable in the United States, so you must enter it on line 17b.
However, in some situations, you can report a lower amount on line 17b.
The most common situations are where:
*All or a part of your pension payment is exempt from U.S. tax,
*A part of your pension payment is attributable to after-tax contributions
to the pension plan, or
*The payment is rolled over to another retirement plan."

- so, does the first exception ("All or a part of your pension payment is exempt from U.S. tax") apply here, because I am applying the dual-taxation treaty?

Once again, feeling confused and stupid at my lack of comprehension of IRS rules..

I'd enter the 403b distribution in 17a and then enter 0.0 in 17b and put a not about the tax treaty exemption

It sounds effectively connected but exempt under the treaty.

I'd enter the 403b distribution in 17a and then enter 0.0 in 17b and put a not about the tax treaty exemption

It sounds effectively connected but exempt under the treaty.

Thanks both - interestingly, that is exactly what I had done on line 17 of the form after swithering back and forth, but then started second-guessing (and third-guessing) myself when I read the notes and then just figuratively put it back in the drawer.

This has ended up being one of those situations where you keep procrastinating - which, when the IRS owes you money, is probably exactly what they want. I've ended up in a situation where my tax return is now considerably late, but am hoping that because I don't owe (in fact they owe me, almost $6,000), there won't be a penalty(?)

Presumably, that also means I will not put anything in line 7 of the Schedule NEC?? (I had originally filled in this section, and entered 0%in column (d), but after much deliberation, decided this didn't make sense).

The 1040 instructions for Schedule NEC (p. 47) state, "Enter your income in the row that lists the correct category of income and in the column that lists the correct tax rate under a tax treaty or the general U.S. tax rules. Use column (d) if the income is subject to a 0% rate. Include income only to the extent it is not effectively connected with the conduct of a trade or business in the United States."

- so, I was looking at the first italicised section, thinking "Yes", but then for the second italicised section, thought, "No" and ended up thinking Yeah but No but Yeah but No, etc., ad infinitum.

Thanks both - interestingly, that is exactly what I had done on line 17 of the form after swithering back and forth, but then started second-guessing (and third-guessing) myself when I read the notes and then just figuratively put it back in the drawer.

This has ended up being one of those situations where you keep procrastinating - which, when the IRS owes you money, is probably exactly what they want. I've ended up in a situation where my tax return is now considerably late, but am hoping that because I don't owe (in fact they owe me, almost $6,000), there won't be a penalty(?)

Presumably you filed an extension by 15 June.

Presumably you filed an extension by 15 June.

No .. don't get me started but this has been a major headache (very literally). I'm usually organised about this sort of thing, but ... ah, well, just trying not to beat myself up about it.

I checked the IRS late filing penalty calculator and it indicated no penalties for late filing if there is no tax owed. <<fingers crossed>>