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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13116
Experience:  15years with H & R Block. Divisional leader, Instructor
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Hi Robin, I have a similar problem. I want to transfer/rollover

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Hi Robin, I have a similar problem. I want to transfer/rollover my US 401k fund to a UK Pension Fund. Having spoken to reps from both companies who say that this can be arranged but neither knows the tax ramifications in the US. If I understand your reply to (the other) Bob, this should be possible without paying any US Tax. Does the form W8 process - or, failing that, the 1040R process - apply in the same way? Many thanks for you help. (a different) Bob

Robin D. :

Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.

Nothing in the Treaty overrides the requirement that the distribution must qualify as an “eligible rollover distribution” within the meaning of section 402(c)(4).
The rollover of the pension funds would not be taxable as long as they go into an eligible plan.
Even if the UK plan would accept the amount that doe snot mean that the US would see the plan as eligible.

The Treaty provides that lump-sum distributions derived from a pension scheme established in one country and beneficially owned by a resident of the other country are taxable only in the country where the pension scheme
is established. So if the distribution occurs in the US it will be taxable to the US. The W8 could not be used to request no withholding.

Robin D. :

This is unfortunate but the money was deferred from taxation while the contributions were being made in the US.

Robin D. :

They have not been taxed. Of course if the 401K had any money in it that was taxed already (called basis) then that amount would be protected from tax on the distribution.

Robin D. :

Unfortunately, the transfer of funds from U.S. Plan to U.K. Plan would not satisfy the rollover requirements under the domestic law of the United States because U.K. Plan is not an eligible retirement plan described in section 402(c)(8)(B).3

Robin D. :

This action would be a distribution for US tax purposes.

Robin D. :

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