US 401K, HK MPF and UK employer pension
Apr 27th 2024, 2:37 pm
#16
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Re: US 401K, HK MPF and UK employer pension
many thanks, Durham
1. I think you mean no report requirement for both IRS and hmrc before receiving the distribution, right?
2. If the UK tax is higher than US tax, I think there is no need for my friend to do the tax return to IRS, but use the tax credit from IRS to avoid the part of the UK tax and pay the difference, right? Just like US citizens can use their US tax return to claim the tax credit in the UK or directly use their UK tax to avoid paying US tax? I really think it doesnt make sense to pay the full UK tax again and then claim the US tax back because probably more than 70% money are used to pay tax firstly and wait for the 30% money back.
1. I think you mean no report requirement for both IRS and hmrc before receiving the distribution, right?
2. If the UK tax is higher than US tax, I think there is no need for my friend to do the tax return to IRS, but use the tax credit from IRS to avoid the part of the UK tax and pay the difference, right? Just like US citizens can use their US tax return to claim the tax credit in the UK or directly use their UK tax to avoid paying US tax? I really think it doesnt make sense to pay the full UK tax again and then claim the US tax back because probably more than 70% money are used to pay tax firstly and wait for the 30% money back.
2. I realize that I'm not in the same situation as your friend as I'm a USC living in the UK so I think dunroving's advice above is much more relevant.
Apr 27th 2024, 2:44 pm
#17
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Re: US 401K, HK MPF and UK employer pension
I've not paid any tax to HMRC on my 401k money because I withdrew it and converted it all to a Roth IRA in a series of lump sums over a 12 year period. There is no early withdrawal 10% penalty if you are over 59.5 years of age, and if you put any withdrawals immediately into a Roth IRA then you can withdraw without penalty any age.
Apr 27th 2024, 2:47 pm
#18
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Re: US 401K, HK MPF and UK employer pension
The other thing my friend wants me to ask is that whether the provider can send the money to the UK bank account? My friend wants to close her US bank account soon since you mention that there is no need to report the tax to IRS even within the distribution. Or she needs to keep it for some other reasons?
Apr 27th 2024, 4:40 pm
#19
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Re: US 401K, HK MPF and UK employer pension
For 1, many thanks. So, I assume you mean no need to think about it for both IRS and HMRC before the distribution, right?
For 2, do you mean every 3 year, you submit the w-8EN to the pension provider TIAA?
For 3. this is brilliant. But you cannot claim the money from both UK and US, right? What I mean is if you claim the pension from both side, even with a portion, it will be higher?
The other thing my friend wants me to ask is that whether the provider can send the money to the UK bank account? My friend wants to close her US bank account soon since you mention that there is no need to report the tax to IRS even within the distribution. Or she needs to keep it for some other reasons?
For 2, do you mean every 3 year, you submit the w-8EN to the pension provider TIAA?
For 3. this is brilliant. But you cannot claim the money from both UK and US, right? What I mean is if you claim the pension from both side, even with a portion, it will be higher?
The other thing my friend wants me to ask is that whether the provider can send the money to the UK bank account? My friend wants to close her US bank account soon since you mention that there is no need to report the tax to IRS even within the distribution. Or she needs to keep it for some other reasons?
2) Correct - every 3 years (though I got away with 5 years, best to keep track. Your provider probably won't remind you.)
3) Yes, you can claim from both. You might not have enough years in UK, nor in US, but if the UK + US years are the "minimum years required" (currently ostensibly 10 years for UK and for US), you can get credit for US years in UK and vice versa. using my previous example, if you had 6 years in US and 4 years in UK, you could claim "state pension" (SSA and DWP) because in total you have the 10 year minimum to qualify for anything at all. But you'd get 6/10ths and 4/10th from US and UK respectively, if that makes sense.
My provider in the US (TIAA) pays direct into my UK £ bank account and so does the SSA. Neither charges a transfer fee, and exchange rates are very good. You can (I think) elect to get SSA paid into a UK-based USD account, but (I think) once you have made your choice (paid in $ or in £), I don't think you can subsequently change it ... I could be wrong on that, though, so DYOR.
Apr 27th 2024, 4:43 pm
#20
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Re: US 401K, HK MPF and UK employer pension
Apr 27th 2024, 6:37 pm
#21
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Re: US 401K, HK MPF and UK employer pension
100% agree on importance of DYOR for all things tax related because everyone's life situation on this Board will have slight differences that lead to different tax situations. The IRS has a list of 'approved' exceptions to the 10% penalty, which include the 59.5 age threshhold - but I was 'separated from service' after I was 55 which means I can take 401k distributions before the age of 59.5 without the 10% early withdrawal penalty. The devil's in the detail.....
Apr 28th 2024, 12:51 am
#22
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Re: US 401K, HK MPF and UK employer pension
got it, many thanks
Apr 28th 2024, 1:00 am
#23
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Re: US 401K, HK MPF and UK employer pension
1) Correct
2) Correct - every 3 years (though I got away with 5 years, best to keep track. Your provider probably won't remind you.)
3) Yes, you can claim from both. You might not have enough years in UK, nor in US, but if the UK + US years are the "minimum years required" (currently ostensibly 10 years for UK and for US), you can get credit for US years in UK and vice versa. using my previous example, if you had 6 years in US and 4 years in UK, you could claim "state pension" (SSA and DWP) because in total you have the 10 year minimum to qualify for anything at all. But you'd get 6/10ths and 4/10th from US and UK respectively, if that makes sense.
My provider in the US (TIAA) pays direct into my UK £ bank account and so does the SSA. Neither charges a transfer fee, and exchange rates are very good. You can (I think) elect to get SSA paid into a UK-based USD account, but (I think) once you have made your choice (paid in $ or in £), I don't think you can subsequently change it ... I could be wrong on that, though, so DYOR.
2) Correct - every 3 years (though I got away with 5 years, best to keep track. Your provider probably won't remind you.)
3) Yes, you can claim from both. You might not have enough years in UK, nor in US, but if the UK + US years are the "minimum years required" (currently ostensibly 10 years for UK and for US), you can get credit for US years in UK and vice versa. using my previous example, if you had 6 years in US and 4 years in UK, you could claim "state pension" (SSA and DWP) because in total you have the 10 year minimum to qualify for anything at all. But you'd get 6/10ths and 4/10th from US and UK respectively, if that makes sense.
My provider in the US (TIAA) pays direct into my UK £ bank account and so does the SSA. Neither charges a transfer fee, and exchange rates are very good. You can (I think) elect to get SSA paid into a UK-based USD account, but (I think) once you have made your choice (paid in $ or in £), I don't think you can subsequently change it ... I could be wrong on that, though, so DYOR.
many thanks. So for the final question. can u deal with IRS by UK bank or have to find a US bank account?
H
Apr 28th 2024, 1:01 am
#24
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Re: US 401K, HK MPF and UK employer pension
Apr 28th 2024, 1:01 am
#25
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Re: US 401K, HK MPF and UK employer pension
100% agree on importance of DYOR for all things tax related because everyone's life situation on this Board will have slight differences that lead to different tax situations. The IRS has a list of 'approved' exceptions to the 10% penalty, which include the 59.5 age threshhold - but I was 'separated from service' after I was 55 which means I can take 401k distributions before the age of 59.5 without the 10% early withdrawal penalty. The devil's in the detail.....
H
Apr 28th 2024, 7:23 am
#26
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Re: US 401K, HK MPF and UK employer pension
If your friend is going to have to file with the IRS to get a refund and pay any taxes I think it will have to be through a US bank or via paper check in USD.
Apr 30th 2024, 2:20 pm
#27
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Re: US 401K, HK MPF and UK employer pension
US banks only I’m afraid when dealing with the IRS but I expect a Wise USD account will work. I still have a US bank that I use with the IRS but I do have a Wise USD account that I opened from England and that works great with my brokerage where my IRA pension is. I have an IRS online account and yesterday made an estimated payment for 2024, giving my US bank routing and account number, and I’m pretty sure I could have have used my Wise USD account instead.
If your friend is going to have to file with the IRS to get a refund and pay any taxes I think it will have to be through a US bank or via paper check in USD.
If your friend is going to have to file with the IRS to get a refund and pay any taxes I think it will have to be through a US bank or via paper check in USD.
H
Apr 30th 2024, 2:33 pm
#28
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Re: US 401K, HK MPF and UK employer pension
many thanks. Sorry ,do u mean wire bank is ok for the IRS tax payment and refund or not? The issue is that US bank may generate the interests and need to pay tax again technically and if it is inactive for 2 years, it will be dormant. However, my friend still has a quite long period before receiving the distribution.
H
H
https://wise.com/
May 1st 2024, 3:03 am
#29
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Re: US 401K, HK MPF and UK employer pension
Wise is foreign exchange company that I have used for many years now and in the last 2 or 3 years it has been providing the ability to have bank accounts in many countries and their currencies including the USA and UK. In the USA your bank account has a US style routing number and your own bank account number, and in the UK your bank account will have a UK style sort code and your own account number. I also have the Wise app on my phone which makes it even easier to manage than through my laptop. My US Wise bank account is registered with my US brokerage (Vanguard in my case) so when I make a withdrawal from my IRA that is where the money goes. The moment it arrives in my Wise account I get notified by Wise so I go into the app and transfer the money to my UK HSBC bank account. Since I have made previous transfers to my UK HSBC account it is already listed as a possible payee so sending the money is a few clicks and it literally arrives in my UK HSBC account in seconds.
https://wise.com/
https://wise.com/
May 1st 2024, 3:07 am
#30
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Re: US 401K, HK MPF and UK employer pension
UK citizen and resident here, I used to live in the States, but I'm not a PR (Green Card holder), and am classified as a Non-resident alien (NRA) for US tax purposes. I have no idea about the Hong Kong side of things, but can tell you the following:
I receive monthly payments from my US 403b (similar to 401k), and these are not taxed in the US - I declare and pay tax to HMRC. I have to complete a W-8BEN every 3 years to prevent taxes being taken out at the US side. Initially, my provider took out US Federal taxes and I claimed back, but eventually got it sorted out and now I pay no taxes to the IRS.
Depending on how long your fiend lived in the US, she may be able to claim US Social Security pension (like a "state pension".) If she has at least 10 years (40 "quarters") of contributions, she definitely qualifies. If she has fewer than 10 years SSA contributions, she may be able to use UK national insurance contributions to qualify for a US SSA pension. Lots of threads in here on the latter subject.
I receive monthly payments from my US 403b (similar to 401k), and these are not taxed in the US - I declare and pay tax to HMRC. I have to complete a W-8BEN every 3 years to prevent taxes being taken out at the US side. Initially, my provider took out US Federal taxes and I claimed back, but eventually got it sorted out and now I pay no taxes to the IRS.
Depending on how long your fiend lived in the US, she may be able to claim US Social Security pension (like a "state pension".) If she has at least 10 years (40 "quarters") of contributions, she definitely qualifies. If she has fewer than 10 years SSA contributions, she may be able to use UK national insurance contributions to qualify for a US SSA pension. Lots of threads in here on the latter subject.
Dunroving, sorry for the final question. I think u mentioned that you got US fed tax and claimed back. When u did this, did you use UK bank account to deal with it or u have to find a US bank to finish it? Thanks.
H