The US/UK tax treaty protects Roth accounts from UK tax. From the treaty Technical Explanation:In terms of our future US/UK tax obligations, does it make more sense to put our retirement savings into a workplace traditional 401(k) or a workplace Roth 401(k)? Both options receive a 100% (traditional) employer match up to 8.75%. I'm wondering how the UK taxes income from Roth withdrawals vs those from a traditional 401(k)?
The Traditional versus Roth wiki page details a general framework for comparing account types, to decide which to contribute to. This would hold in the case of a move to the UK, except that you now have to factor in uncertain UK tax rates, an uncertain USD/GBP exchange rate, and the possibility of a treaty change or even (remote?) termination. (Notable, there is no ex-ante solidly right answer even for the US-only case.)However, the State of residence, under subparagraph (b), must exempt from tax any amount of such pensions or other similar remuneration that would be exempt from tax in the State in which the pension scheme is established if the recipient were a resident of that State. Thus, for example, a distribution from a U.S. "Roth IRA" to a U.K. resident would be exempt from tax in the United Kingdom to the same extent the distribution would be exempt from tax in the United States if it were distributed to a U.S. resident. The same is true with respect to distributions from a traditional IRA to the extent that the distribution represents a return of nondeductible contributions.
Statistics: Posted by TedSwippet — Wed Sep 18, 2024 2:00 am — Replies 1 — Views 96