This guide is for people whose retirement savings sit on both sides of the Atlantic: Britons back from a US career with an old 401(k) and an IRA, and Americans in Britain with a SIPP or workplace pension alongside their US accounts. In brief, the pots cannot be merged, but the plan can: list every pot with its tax treatment in both countries, map when each one opens, decide which currency each will be spent in, and then choose the order of withdrawals year by year, including what happens on death.
Why do I need one plan rather than a UK plan and a US plan?
Because the decisions interact. A withdrawal from an IRA uses up the same UK tax bands as a withdrawal from a SIPP, the year your State Pension starts changes how much of each later withdrawal is taxed, and the exchange rate decides what a dollar account is worth to someone who spends pounds. Two separate plans can each look sensible and together draw the wrong pot in the wrong year.
The pots themselves cannot be combined: UK pensions cannot move into US accounts or the reverse, as consolidating pensions across two countries explains. What can be joined up is the plan. The seven steps below are a working method, not a recommendation; the right answer depends on your circumstances, and the rules in both countries change.
Step 1: What should I list for each pension and account?
For each pot, record what it is, who owns it, its currency, how each country taxes withdrawals, the earliest penalty-free age, any guarantees, and who is named to receive it on death, using the latest statement. Most planning errors trace back to a missing line.
| Item | Why it matters |
|---|---|
| Type of arrangement (401(k), 403(b), traditional or Roth IRA, SIPP, workplace defined contribution or defined benefit scheme) | Decides access age, required withdrawals and tax treatment |
| Owner, and whether either spouse is a US citizen or green-card holder | A US person is taxed by the US on worldwide income; a non-US person mainly is not |
| Currency and value | Exchange-rate risk |
| Tax on withdrawal in the UK and in the US | The treaty treats regular payments, lump sums, Roth money and social security differently |
| Earliest penalty-free access age, and any protected pension age | Sets the timeline in Step 2 |
| Guarantees and protections | Can be lost on transfer and not rebuilt |
| Beneficiary designation or expression of wish | A US plan pays whoever the form names; a UK scheme considers your wishes |
| State pension records | Set the floor of income |
Two items need special care: each spouse’s US status, because the same 401(k) is taxed very differently for a US citizen and for a Briton who worked in America on a visa; and beneficiary forms, often completed years ago in another country.
Step 2: When can I take money from each pot?
Each system has its own ages, and they rarely line up. UK pensions open at the normal minimum pension age, which is 55 until 5 April 2028 and 57 from 6 April 2028, unless you have a protected pension age.[1] US accounts can be drawn at any age, but before 59½ most withdrawals carry a 10% additional tax.[2] The state pensions and required withdrawals come later.
| Age | What happens | Points to check |
|---|---|---|
| 55, rising to 57 on 6 April 2028 | UK registered pensions can pay benefits | Uniformed services keep 55; a protected pension age needs a right held before 4 November 2021[1] |
| 55 (US employer plans only) | No 10% additional tax on a 401(k) or similar plan if you left that employer in or after the year you turned 55 | Does not apply to IRAs, so it is lost if the money is rolled into an IRA[2] |
| Any age | Substantially equal periodic payments under section 72(t) avoid the 10% tax | Must continue for five years or to 59½, whichever is later; changing them triggers recapture[12] |
| 59½ | US accounts free of the 10% additional tax | Income tax still applies; Roth earnings also need the five-year rule[2][13] |
| 62 to 70 | Social Security can be claimed | At 62 the benefit is 30% lower where full retirement age is 67; each year of delay after 67 adds 8% until 70[4][5] |
| 66 to 68 | UK State Pension age | 67 for births from 6 March 1961 to 5 April 1977[3] |
| 73 or 75 | Required minimum distributions from traditional IRAs and employer plans | 73 if born 1951 to 1958; 75 if born 1960 or later; the IRS has proposed 73 for 1959 births but not finalised it[7][14] |
The 2028 change matters most to people born between 6 April 1971 and 5 April 1973: they reach 55 before the rise and 57 after it, so unless they draw before 6 April 2028 they wait until 57. It also narrows the gap to penalty-free US access at 59½ from four and a half years to two and a half; see the 2028 rise to 57.
Required minimum distributions are fixed obligations: delaying the first to 1 April of the next year puts two in one US tax year, and a missed one costs a 25% excise tax, cut to 10% if corrected within two years.[6] The annual amount is the previous year-end balance divided by an IRS divisor — 24.6 at 75.[15] See RMDs on your own IRA or 401(k) in the UK.
Step 3: How is each pot taxed when I live in the UK?
For a UK resident who is not a US citizen or green-card holder, the UK taxes most pension income and the US largely steps back. For a US citizen, both countries can tax most of it and the US then gives credit for UK tax. The 2001 US–UK treaty sets the split, and its “saving clause” in Article 1(4) lets the US tax its citizens as if the treaty did not exist except for the provisions listed in Article 1(5).[8]
| Pot and payment | UK view | US view: US citizen | US view: non-US person |
|---|---|---|---|
| 401(k) or traditional IRA, regular withdrawals | Taxable in full as foreign pension income at your marginal rate[16] | Also taxable in the US; Article 17(1)(a) is not protected from the saving clause, and the US credits UK tax under Article 24(6). Withholding generally cannot go below 10% on payments sent abroad[8][17] | Taxable only in the UK under Article 17(1)(a); 30% is withheld unless a Form W-8BEN treaty claim is made[8][18] |
| 401(k) or IRA, lump sums | HMRC’s view since March 2025: the UK can tax, with credit for US tax; a payment of 20% or more of the fund is likely to be a lump sum[19] | Taxable in the US[8] | Article 17(2) gives the US the taxing right, and HMRC says the UK can tax as well[19] |
| Roth IRA, qualified distributions | Exempt to the same extent as in the US[10] | Tax-free once the five-year rule and age 59½ (or another condition) are met[13] | As for a US citizen |
| UK SIPP or workplace pension, taxable withdrawals | Taxable at your marginal rate | Taxable in the US, with credit for UK tax[8] | Not taxed |
| UK tax-free cash (25%, up to £268,275) | Tax-free within the lump sum allowance[20] | Unsettled: the IRS (memorandum AM2008-009) and HMRC both read the saving clause as overriding Article 17(2), and no regulation or published ruling decides it; there is no UK tax to credit[21][19] | Not taxed |
| US Social Security | Taxable | Exempt from US tax under Article 17(3)[9] | Exempt from US tax[9] |
| UK State Pension | Taxable | The US may also tax as a citizen; confirm with a US tax preparer | Not taxed |
Three points follow. For a US citizen the foreign tax credit works when the UK tax is real; where the UK charges nothing, as on tax-free cash, there is nothing to credit; UK tax-free cash for US taxpayers sets out that debate without picking a side. The credit also “cannot reduce U.S. taxes on U.S. source income”,[22] which matters for Roth conversions (Step 5). And since March 2025 a large one-off US withdrawal can be taxed differently from the same money taken in instalments.[19] See US accounts when you live in the UK and UK pensions for Americans.
Step 4: Which currency should each pot be spent in?
Start from where the money will be spent. For a household retiring in Britain the damaging direction is a stronger pound, which shrinks what dollar savings buy. On Federal Reserve data the pound rose from about $1.40 in June 2001 to about $2.07 in November 2007, a cut of roughly a third in the sterling value of a fixed dollar sum.[23]
The practical questions are which future spending is genuinely in dollars (a US home, children in America, a move back) and how much of the rest dollar assets should fund. Currency also runs through tax: the UK taxes a dollar withdrawal in pounds, so the same withdrawal can stay in the basic-rate band at one exchange rate and spill into the higher rate at another. The levers are the investments inside each account and the timing of conversions. GBP/USD currency risk in retirement has the history and the tax rules.
Step 5: In what order should I draw on my pots?
There is no standard order; the useful question each year is what the next pound or dollar costs in tax in both countries, now and later. These considerations recur; none is a recommendation.
- Unused UK bands. For 2026/27 the first £12,570 of income is covered by the personal allowance and income up to £50,270 is taxed at 20%; above £100,000 the allowance is withdrawn at £1 for every £2, an effective 60% rate. Both thresholds are frozen until 5 April 2031.[24][25] The years between leaving work and claiming state pensions are often the only ones in which the allowance and the basic-rate band are otherwise empty.
- State pensions fill the bands later. A full new State Pension of £241.30 a week is £12,548 a year, almost the whole personal allowance, before any Social Security.[26]
- Required withdrawals reduce flexibility. Drawing traditional accounts earlier can reduce later required amounts, at the cost of paying tax sooner.
- Roth conversion windows (US citizens). Converting traditional IRA money to a Roth IRA is US taxable income in the year of conversion. For 2026 a single filer with no other US-taxable income would pay $5,020 of federal tax on a $60,000 conversion, using the $16,100 standard deduction and the 10% and 12% brackets — our own arithmetic.[27] But a US citizen’s UK pension income also sits in US taxable income, the credit cannot offset US tax on US-source income,[22] and HMRC has not formally confirmed how it treats conversions. A low-income year can still be a window, but it needs modelling in both systems.
- Tax-free cash timing (US citizens). US tax on tax-free cash may go unrelieved; taking it in a year when other UK pension income generates credits is one consideration for a US preparer to test.
- Inheritance tax from 2027. Once unused pensions are inside the UK estate, leaving the pension untouched is no longer automatically the efficient choice for heirs (Step 6).
Sustainable spending and sequence risk interact with the order; see how much can I spend in retirement?
Step 6: What happens to each pot when I die?
Each pot follows its own rules. From 6 April 2027 most unused UK pension funds and death benefits count in the estate for UK inheritance tax; personal representatives report and pay, death-in-service benefits are excluded, and the spouse exemption still applies where the surviving spouse is a long-term UK resident.[11] Where the member dies at 75 or over, the beneficiary also pays income tax, but only on the part left after inheritance tax.[11] The nil-rate bands are frozen until 5 April 2031.[25] Whether a US IRA or 401(k) is caught is not settled; HMRC has said further guidance on international issues will follow (see pensions and UK inheritance tax from 2027).
Inherited US accounts have their own clock. Most non-spouse beneficiaries of an owner who died in 2020 or later must empty the account by the end of the tenth year after death, with annual minimum withdrawals in the meantime where the owner had reached their required beginning date; a surviving spouse has more options.[28][7] A UK-resident child pays UK income tax on those withdrawals; see inheriting a US IRA while living in the UK.
US estate tax depends on status. A US citizen’s worldwide estate is in scope, with a basic exclusion of $15,000,000 in 2026.[27] A non-citizen who is not US-domiciled is taxed on US-situs assets, which include shares in US companies, and a return is needed where those exceed $60,000;[29] for UK nationals the 1978 estate tax treaty can limit the US charge, but a return and a claim are still needed.[30] How a US retirement account counts in a non-citizen’s estate is a question for a US estate specialist; see UK inheritance tax and US estate tax.
Step 7: How do I keep the plan up to date?
Treat the plan as a model to revisit, not a document to file: at least yearly, and whenever one of these happens:
- a change of residence, citizenship or green-card status for either spouse;
- a birthday that opens or closes a door — 55, 57, 59½, 62, State Pension age, 70, 73 or 75;
- a large move in markets or in GBP/USD;
- a change in either country’s tax rules or guidance;
- a death, divorce, marriage or inheritance, and with it the beneficiary forms;
- a statement or State Pension forecast that differs from the plan’s assumption.
As Edale’s guide to financial planning tools for US expats and Brits who worked in America puts it, the household has one financial life, even if two countries have an interest in it.
Worked example: a Briton back from a US career (our own arithmetic, not a planner output)
Fictional household, illustrative only. Tom was born on 10 May 1972 and is 54. A UK national, he worked in the US from 2004 to 2018 on an employment visa, has never been a US citizen or green-card holder, and has been UK resident and employed since 2018. His wife Helen, 52, is a UK national; the figures are Tom’s alone. Assumed pots: a UK workplace defined contribution pension of £180,000, a SIPP of £120,000, a 401(k) with the employer he left in 2018 aged 46 worth $260,000, and a rollover IRA of $140,000. Assumed State Pension forecast £190 a week and Social Security estimate at 67 of $1,500 a month, both in today’s terms. Target spending £45,000 a year after tax in today’s money. Exchange rate held at $1.35 to the pound, close to the August 2026 average.[23] UK 2026/27 rates for England, Wales and Northern Ireland are held flat (the personal allowance and basic rate limit are frozen to 5 April 2031); no investment growth, inflation or currency movement; no protected pension age. Our own calculations from official rates, not a projection; results are not guaranteed, tax rules change, and this is not a recommendation.
| Date | Age | What changes |
|---|---|---|
| 10 May 2027 | 55 | UK pensions can be drawn — but only until 5 April 2028 |
| 6 April 2028 | 55 | Minimum pension age becomes 57; UK pensions closed to Tom again[1] |
| 10 May 2029 | 57 | UK pensions reopen; Tom plans to stop work |
| 10 November 2031 | 59½ | 401(k) and IRA free of the 10% additional tax. The age-55 rule does not help: he left that employer at 46[2] |
| May 2034 to May 2042 | 62 to 70 | Social Security: about $1,050 a month at 62, $1,500 at 67, $1,860 at 70[4][5] |
| May 2039 | 67 | UK State Pension age[3] |
| 2047 | 75 | First required minimum distribution year, as he was born after 1959[7] |
The bridge, 57 to 59½. Only the UK pots are open without a US cost unless Tom sets up 72(t) payments. If each UK withdrawal is taken 25% tax-free and 75% taxable, £49,984 a year gives £12,496 tax-free and £37,488 of taxable income; UK tax is 20% × (£37,488 − £12,570) = £4,984, leaving £45,000. Two and a half years of that uses about £125,000 of the £300,000 UK pots and leaves £12,782 of basic-rate band unused each year. As Tom is not a US person, the tax-free cash raises no US question.
59½ to 67. The US accounts open. Regular payments to Tom are taxed only in the UK, but 30% is withheld unless he files a Form W-8BEN treaty claim.[18] Size matters: $50,000 in one payment from the $140,000 IRA would be about 36% of it, above the 20% at which HMRC says a payment is likely to be a lump sum, which both countries can tax.[19]
From 67. The State Pension (£190 × 52 = £9,880) and Social Security ($18,000, about £13,333) together give £23,213, taxed only in the UK.[8] That uses the whole personal allowance and leaves £27,057 of room below the £50,270 higher-rate threshold, against the full £50,270 in the bridge years. Every taxable pound drawn after 67 is therefore taxed at 20% or more, and meeting the £45,000 target entirely from the IRA (about $41,600 gross, or £30,840) would push £3,783 into the 40% band. At 75, if the IRA held $300,000 at the end of 2046, the 2047 required distribution would be $300,000 ÷ 24.6 = $12,195.[15]
What it shows: Tom’s cheapest years for taxable pension income are those between 57 and 67, when the bands are otherwise empty, and the 2028 rule change both closes a door at 55 and shortens the gap to 59½. Whether he should draw harder then, delay Social Security to 70 or keep the UK pots for later depends on his health, heirs and spending, which arithmetic alone does not answer.
How the Edale Wealth Hub helps
The steps above are what Edale’s planner is built to hold in one place. An adviser and client enter each pot separately, with its own tax treatment and currency — 401(k), Roth 401(k), 403(b), 457(b), traditional and Roth IRAs and inherited accounts on the US side; SIPPs, workplace and defined benefit pensions, the State Pension and ISAs on the UK side, plus Social Security — and the plan runs year by year to age 100 and beyond in any mix of currencies. It applies UK income tax and US federal tax together, including foreign tax credits and treaty treatment for US persons, so it shows what the household keeps.
The timeline has its own tools: the minimum pension age rising to 57, 72(t) planning across all three IRS methods, year-by-year Roth conversions, and a forecast of required minimum distributions on a client’s own IRAs and 401(k)s in My Advice, explaining the first year. An inherited IRA optimiser searches withdrawal schedules for the one leaving the most after tax, never below the legal minimum, and alternative withdrawal orders can be compared side by side.
Risk is tested rather than assumed: Monte Carlo analysis across hundreds of simulated market histories, replayed market history, and twelve named GBP/USD and GBP/EUR currency episodes back to 1980. On death, the planner models UK inheritance tax to the second death, including pensions in the estate from April 2027, and — since 1 October 2026 — US federal gift and estate tax with the estate tax treaty credits; US state estate taxes and generation-skipping tax are not modelled.
My Investments shows accounts linked by the adviser — currently Interactive Brokers UK and US only — with valuations, income and a US tax summary that is a “1099-style summary, not a Form 1099”. Edale does not prepare US tax returns and is not a US-registered investment adviser; tax outputs are summaries for your preparers. See the cashflow planner or arrange a conversation.
Frequently asked questions
Can I combine my 401(k), IRA and UK pension into one account?
No. A UK registered pension can move only to another UK scheme or a qualifying recognised overseas pension scheme, none of which is in the United States, and a 401(k) or IRA can roll over only into another US account. What you can combine is the plan: one model that holds every pot with its own tax treatment, access age and currency, and decides the order of withdrawals across both.
When can I take money from my UK pension and my 401(k)?
UK pensions can normally be drawn from 55, rising to 57 on 6 April 2028 unless you have a protected pension age. US accounts can be drawn at any age, but most withdrawals before 59½ carry a 10% additional tax. A 401(k) escapes that from 55 if you left that employer in or after the year you turned 55; an IRA does not.
Is my 401(k) or IRA taxed in the UK or the US if I live in the UK?
Regular withdrawals are taxed in the UK as pension income. If you are not a US citizen or green-card holder, the treaty makes them taxable only in the UK, though 30% is withheld unless you file a Form W-8BEN treaty claim. A US citizen is taxed by both countries and the US credits the UK tax. Since March 2025 HMRC says both countries can tax lump sums.
Is US Social Security taxed in the UK?
Yes. Article 17(3) of the US–UK treaty makes social security taxable only in the country where the recipient lives, and the rule overrides the saving clause, so US Social Security paid to a UK resident, including a US citizen, is taxed in the UK and not in the US. The UK State Pension paid to a US resident is taxed only in the US.
Do I have to take required minimum distributions if I live in the UK?
Yes. The obligation follows the account, not your residence. Distributions from traditional IRAs and employer plans start at 73 if you were born between 1951 and 1958 and at 75 if born in 1960 or later; the IRS has proposed 73 for 1959 births. Roth IRAs have none during your lifetime. A missed distribution costs a 25% excise tax, reduced to 10% if corrected within two years.
Should I draw my UK pension or my US accounts first?
There is no standard order. It depends on when each pot opens, your income each year, whether either spouse is a US citizen, the exchange rate, required minimum distributions and what you want to leave. The years between stopping work and claiming state pensions often have unused UK tax bands, so the order is worth modelling year by year. Whether any approach suits you depends on your circumstances; take advice.
Sources
- HM Revenue & Customs and HM Treasury — Increasing normal minimum pension age (policy paper) (accessed October 2026)
- IRS — Retirement topics: exceptions to tax on early distributions (accessed October 2026)
- Department for Work and Pensions — State Pension age timetable (accessed October 2026)
- Social Security Administration — Benefit reduction for early retirement (accessed October 2026)
- Social Security Administration — Delayed retirement credits (accessed October 2026)
- IRS — Retirement topics: required minimum distributions (RMDs) (accessed October 2026)
- Federal Register — Required minimum distributions, final regulations (TD 10001), 19 July 2024 (accessed October 2026)
- US Treasury — Convention between the United States and the United Kingdom for the avoidance of double taxation (2001), Articles 1, 17, 18 and 24 (accessed October 2026)
- IRS — Publication 915, Social Security and Equivalent Railroad Retirement Benefits (accessed October 2026)
- HMRC — Double Taxation Relief Manual DT19853: United States of America, notes (accessed October 2026)
- HMRC — Technical note: Inheritance Tax on pensions (accessed October 2026)
- IRS — Substantially equal periodic payments (accessed October 2026)
- IRS — Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) (accessed October 2026)
- Federal Register — Required minimum distributions, proposed regulations (REG-103529-23), 19 July 2024 (accessed October 2026)
- eCFR — 26 CFR 1.401(a)(9)-9, Uniform Lifetime Table (accessed October 2026)
- HMRC — Employment Income Manual EIM75500: the taxation of pension income, foreign pensions (accessed October 2026)
- IRS — Form W-4R (2026), Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions (accessed October 2026)
- IRS — Plan distributions to foreign persons require withholding (accessed October 2026)
- HMRC — International Manual INTM163160: pensions, lump sums (accessed October 2026)
- GOV.UK — Pension schemes rates and allowances (accessed October 2026)
- IRS Office of Chief Counsel — Memorandum AM2008-009, Rollover of distributions from U.K. pension schemes (21 August 2008) (accessed October 2026)
- IRS — Publication 514, Foreign Tax Credit for Individuals (accessed October 2026)
- Federal Reserve Bank of St. Louis (FRED) — U.S. dollars to U.K. pound sterling spot exchange rate, monthly (EXUSUK), source: Federal Reserve H.10 (accessed October 2026)
- GOV.UK — Income Tax rates and Personal Allowances (2026 to 2027) (accessed October 2026)
- HM Treasury and HMRC — Budget 2025: overview of tax legislation and rates (accessed October 2026)
- GOV.UK — The new State Pension: what you’ll get (accessed October 2026)
- IRS — Tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful Bill (accessed October 2026)
- IRS — Retirement topics: beneficiary (accessed October 2026)
- IRS — Some nonresidents with U.S. assets must file estate tax returns (accessed October 2026)
- IRS — Instructions for Form 706-NA (accessed October 2026)