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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 15871
Experience:  International tax
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I am an Indian citizen. I currently reside in the UK. I had

Customer Question

Hi, I am an Indian citizen. I currently reside in the UK. I had a 401k (US employer pension) when I worked in the US. My 401k is pretax and is about $120,000. I want to withdraw my 401k and bring it into the UK for investing in our house. I want to avoid double taxation but also want to understand what options I have and the best option (least tax) to bring the money to UK?
Submitted: 5 months ago.
Category: Tax
Expert:  TaxRobin replied 5 months ago.

Hello and thank you for allowing me to assist you.

Expert:  TaxRobin replied 5 months ago.

The US will tax the distribution because you were never taxed on it when the contributions were made and the tax treaty gives the US the authority to tax.
Article 17 of the UK/USA DOUBLE TAXATION CONVENTION:
"2. Notwithstanding the provisions of paragraph 1 of this Article, a lump-sum payment derived from a pension scheme established in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in the first-mentioned State."

The UK would not tax you on the lump sum distribution.

Expert:  TaxRobin replied 5 months ago.

A positive 5 star rating is appreciated so I am credited for assisting.