US citizen but UK permant UK resident – Inherited IRA
A non-spouse (son) beneficiary of a clients IRA is a U.S. citizen but permanent resident of the United Kingdom. Does he retain the three inherited IRA options? Can he use the stretch option? Any idea on U.S. tax consequences?
Permalink Submitted by Jose Morales on Tue, 2015-07-21 20:53
The beneficiary options are not contingent on where a person resides or to which country they are a citizen. However, being a residing in another country will certainly make the mechanics of opening an inherited IRA and taking distributions over the beneficiary’s life expectancy difficult.
Permalink Submitted by Alan - IRA critic on Tue, 2015-07-21 21:07
There is a default mandatory withholding rate of 30% on distributions, but there might be an exception in the US-UK tax treaty.