Arrival is not a tax event
Becoming UK resident does not crystallise anything inside a 401(k). Growth, dividends and fund switches within the plan are not taxed by the UK or the US as they occur; both systems wait until money leaves the wrapper. What changes on arrival is who taxes the eventual withdrawals. Under Article 17(1) of the UK-US treaty, pensions are taxable in the state where you live, so a UK resident drawing regular payments pays UK Income Tax at their marginal rate, with credit for any US tax properly due. Because contributions and growth were tax-deferred, the whole gross payment is income. Our guide to 401(k), IRA and Roth UK tax treatment covers each account, and the moving to the UK from the USA guide covers the rest of the arrival.
If your provider restricts the account
A common shock: your US plan or brokerage sees a UK address and restricts the account, anything from blocking new contributions to asking you to move it or closing it. That is a commercial decision, not a tax event; nothing is taxed because trading is frozen. What matters is what happens to the money next. A direct rollover or trustee-to-trustee transfer to another US provider is not taxable and nothing is withheld. A cash-out paid to you is a distribution: the plan must withhold 20%, the 10% additional tax applies if you are under 59 and a half, and you have 60 days to roll the money into another US retirement account, making up the withheld amount from other funds or the shortfall is itself a distribution. Keep the transfer confirmations and 1099 forms, and beware the PFIC traps if a restriction pushes you towards non-US funds.
When you start drawing
Regular payments are UK-taxable as above. Lump sums changed in 2025: on 12 March 2025 HMRC updated its guidance to treat lump-sum distributions from taxable US pension plans as also taxable in the UK, with foreign tax credit relief, using the saving clause in Article 1(4) because Article 17(2) is not a protected provision. The 25% UK tax-free lump sum does not apply to a 401(k), and the US 10% charge before 59 and a half is not removed by the treaty. Report taxable withdrawals on the foreign pages of your Self Assessment return in sterling. US citizens and green-card holders keep a parallel US filing on the same income under the saving clause; a 401(k) is a US account, so it does not go on the FBAR, as our FBAR and FATCA guide explains.