Is my UK pension drawdown income taxable on my US tax return?

Yes. As a US citizen you are taxed on worldwide income, so each drawdown payment is gross income on your Form 1040 in the US calendar year you receive it, translated into US dollars. UK tax actually deducted is relieved by a foreign tax credit on Form 1116 rather than by leaving the income off the return. Article 24(1)(a) of the US-UK Convention obliges the United States to allow that credit in accordance with and subject to the limitations of US law, and Article 24 is one of the provisions the treaty's saving clause does not affect.

Is the UK 25 per cent tax-free element taxable by the IRS?

There is no settled, citable answer, and any source that gives you a flat yes or no is overstating the position. The argument for exemption is Article 17(1)(b), which Article 1(5)(a) preserves against the saving clause, and the Treasury Technical Explanation states that a US citizen receiving a distribution from a UK pension scheme will be taxable on only the portion taxable in the United Kingdom. The argument against is Article 17(2), which covers lump-sum payments, is not in the Article 1(5)(a) list, and which the same Technical Explanation confirms is subject to the saving clause. No IRS ruling addresses flexi-access drawdown or UFPLS by name, and the treaty was signed in 2001, well before the UK flexibilities of 2015.

Why was my first drawdown payment taxed so heavily in the UK, and can I get it back?

Because the scheme had no tax code for you. HMRC's PAYE manual at PAYE94055 confirms that in that situation tax is deducted using the emergency code on a week 1 / month 1 basis, which treats the payment as the first of twelve identical monthly payments and gives you only one twelfth of your allowances and bands. You can reclaim in year using form P55 where you have not emptied the pot, P53Z where you have emptied it and have other income, or P50Z where you have emptied it and have no other PAYE income beyond the State Pension. If you make no claim, HMRC says it will automatically review the position after the end of the tax year and issue a calculation.

What happens to my US foreign tax credit if HMRC refunds the emergency tax later?

The credit you claimed was too large, and the refund is a foreign tax redetermination. Publication 514 requires you to notify the IRS, to file Form 1040-X with a revised Form 1116 for the year concerned where the change alters your US tax liability, and to file Schedule C (Form 1116) with your current-year return identifying the redetermination and the year it relates to. A penalty can apply for failing to notify without reasonable cause, and the Form 1116 instructions note that resulting increases in US tax are excepted from the ordinary limitation period under sections 6501(c)(5) and 905(c). The cleanest answer is to extend the US return and file after the UK refund position is settled.

Do I report my UK pension on the FBAR and Form 8938 as well as reporting the income?

Usually yes, and they are separate obligations from reporting the income. The FBAR is required where your aggregate foreign financial accounts exceeded $10,000 at any time in the calendar year; it is due 15 April with an automatic extension to 15 October, and whether the account produced income is irrelevant. The FinCEN retirement plan exception is written by reference to plans described in specified United States Internal Revenue Code sections and does not on its face cover a UK personal pension. Form 8938 applies at much higher thresholds for taxpayers abroad, and its instructions say to report your interest in the foreign pension plan in Part VI without separately reporting the assets held inside it.

US Tax Return Preparation for Expats: UK Drawdown

Q: Does taking drawdown reduce how much I can still pay into a UK pension?

Yes, and the trigger is the same event you are reporting on the US return. HMRC's Pensions Tax Manual at PTM056520 confirms that a money purchase annual allowance trigger event occurs immediately before the first payment from a flexi-access drawdown fund and when a UFPLS is first paid, and that once triggered the money purchase annual allowance test applies for that tax year and every later one. GOV.UK gives the money purchase annual allowance as GBP 10,000 against a standard annual allowance of GBP 60,000. Your provider must issue a flexible access statement within 31 days of first flexible access, which is useful evidence for the US file as well.

US tax return preparation for expats taking income from a UK pension in drawdown starts from one unwelcome rule: every drawdown payment is gross income on your Form 1040, in US dollars, in the US calendar year you receive it, whether or not HMRC treated part of it as tax free. A US citizen resident in the UK cannot simply import the UK tax-free element. The US-UK income tax treaty contains a real argument for exempting it, but that argument survives the saving clause only if the payment is a pension within Article 17(1), not a lump-sum payment within Article 17(2), and no citable IRS ruling settles which one a flexi-access drawdown payment or an uncrystallised funds pension lump sum is. UK tax actually suffered is relieved by a foreign tax credit on Form 1116, and the pension itself is separately reportable on the FBAR and, above threshold, on Form 8938.

What US tax return preparation for expats with a UK pension in drawdown has to get right

A UK defined contribution pot in drawdown produces a stream of payments that the UK taxes through PAYE and the US taxes as ordinary income. Nothing about that is unusual. What makes the file difficult is that the two systems disagree about three things at once: what part of the payment is income, when the income arises, and how much tax has finally been suffered on it. Every error we see on a drawdown year traces back to one of those three.

The preparer's job is therefore not simply to copy a number off a P60. It is to reconstruct, payment by payment, what was paid, when, out of which part of the pot, with how much UK tax deducted, and whether that UK tax was final. Those facts drive everything downstream.

Gross income: the full payment, including any element the UK treated as tax free, unless a defensible treaty position removes part of it.
Timing: the US calendar year of receipt, which will slice a UK 6 April to 5 April year in two.
Character: pension income taxed at ordinary rates, not capital gain, and not foreign earned income eligible for the Foreign Earned Income Exclusion.
Source: UK source, which is what makes a foreign tax credit possible in the first place.
Foreign tax: UK tax paid or accrued on that income, translated into US dollars, and reduced by any UK refund.
Asset reporting: the pension account itself on FinCEN Form 114 and, above threshold, in Part VI of Form 8938.

Flexi-access drawdown or UFPLS: why the two produce different US reporting

UK savers reach the same economic result by two different routes, and the route leaves different evidence. Under flexi-access drawdown the member designates some or all of the pot into a flexi-access drawdown fund. At that point the tax-free element is normally paid out as a separate pension commencement lump sum and the remainder sits crystallised, from which the member then draws taxable drawdown pension income, often monthly or quarterly, for years. Under an uncrystallised funds pension lump sum, or UFPLS, no designation happens first. HMRC's Pensions Tax Manual at PTM063300 describes a UFPLS as a lump sum paid from uncrystallised money purchase funds where, subject to the member's available allowances, 25 per cent is tax free and 75 per cent is taxed as pension income. Each UFPLS is a self-contained slice of the pot carrying its own tax-free quarter.

So the same GBP 40,000 in the member's bank account can arrive either as a GBP 10,000 tax-free lump sum plus GBP 30,000 of taxable drawdown income out of a crystallised fund, or as a single GBP 40,000 UFPLS of which GBP 10,000 is tax free. The UK tax outcome for the year is usually similar. The US reporting pattern is not, because the paperwork is not, and because the treaty characterisation argument is much harder for something the UK legislation itself calls a lump sum.

This is the part competitors miss. Before you can report anything, you have to work out from the client's UK documents which of the two you are looking at:

Flexi-access drawdown income normally runs through a pension payroll. The client will have a PAYE reference for the scheme, payslips or payment advices at regular intervals, and a P60 for the UK tax year showing total pension paid and total tax deducted. The tax-free lump sum will not appear on the P60, because it is not taxable pension income.
A UFPLS normally produces a one-off payment advice rather than a payroll record, showing a single gross amount split between a tax-free element and a taxable element, with tax deducted from the taxable element only.
The first flexible access of either kind triggers a flexible access statement. GOV.UK confirms the provider must send it within 31 days of the member first flexibly accessing the pension. That statement is a dated document and it is the cleanest evidence a preparer will get of when crystallisation actually happened.
Where the client has both a crystallised drawdown fund and remaining uncrystallised funds, expect two payment streams from the same provider and, quite often, two sets of paperwork that look nothing like each other.

What the preparer does differently: with flexi-access drawdown income, you have a regular, scheduled, PAYE-coded stream that reads naturally as a pension, and a separate tax-free lump sum event that is best analysed on its own. With UFPLS you have a series of discrete payments, each one described in UK statute as a lump sum, each one carrying its own 25 per cent. If a treaty position is going to be taken on the tax-free element, the drawdown stream is the stronger fact pattern and the UFPLS is the weaker one. That is a reporting decision, not a product preference, and it is worth knowing before the client presses the button at the provider.

What crystallisation means in the UK, and what it does not mean for the IRS

Crystallisation is a UK concept. Designating funds into a flexi-access drawdown fund crystallises them, fixes the tax-free element by reference to the member's lump sum allowance, and changes the UK administrative treatment of the pot. GOV.UK notes that after taking the tax-free element you normally have six months to start taking the remaining 75 per cent, which is usually taxed. The standard lump sum allowance is GBP 268,275, and the standard lifetime allowance was abolished from 6 April 2024.

None of that is a US taxable event by itself. Designating funds into drawdown moves money from one pocket of the same pension scheme to another pocket of the same scheme. Article 18(1) of the Convention provides that income earned by the pension scheme may be taxed as income of the individual only when, and to the extent that, it is paid to or for the benefit of that individual and not transferred to another pension scheme, and Article 1(5)(a) lists paragraph 1 of Article 18 among the provisions the saving clause does not affect. So the deferral in Article 18(1) is available to a US citizen. What matters for the US return is cash out of the scheme to the member, not the internal UK label attached to the remaining funds. A preparer who reports a crystallisation as a distribution has overstated income; a preparer who ignores the tax-free lump sum because the UK called it tax free may well have understated it.

Is the UK tax-free element taxable on your US return?

Start with the default. US citizens are taxed on worldwide income, and there is no provision of the Internal Revenue Code that exempts a distribution from a UK pension because the United Kingdom chose not to tax part of it. Absent a treaty position, the whole payment is includible. Note also that a foreign tax credit cannot fix this, because the UK charged no tax on the tax-free slice, so there is no UK tax to credit against it. The only routes are an exclusion argument under the treaty or accepting the US charge.

Now the treaty argument, precisely. Article 17(1)(a) gives the state of residence the exclusive right to tax pensions and other similar remuneration. Article 17(1)(b) then says that, notwithstanding sub-paragraph (a), the amount of any such pension paid from a pension scheme established in the other Contracting State that would be exempt from taxation in that other State if the beneficial owner were a resident thereof shall be exempt from taxation in the first-mentioned State. Read against a US citizen resident in the UK, the mirror of that rule is what supports exempting the UK tax-free element from US tax.

The saving clause is where most analyses stop too early. Article 1(4) allows a Contracting State to tax its citizens as if the Convention had not come into effect, notwithstanding any provision except paragraph 5 of that Article. Article 1(5)(a) then lists what paragraph 4 does not affect, and the list includes, in terms, sub-paragraph b) of paragraph 1 and paragraphs 3 and 5 of Article 17, and paragraph 1 of Article 18. Article 17(1)(b) is therefore preserved for US citizens. Article 17(1)(a) is not, which is why a US citizen resident in the UK still pays US tax on the taxable part of the pension despite the exclusive residence-state rule.

The Treasury Technical Explanation to the Convention confirms the reading. It states that a US citizen who receives a distribution from a pension scheme established in the United Kingdom will be taxable on only the portion of the pension distribution that is taxable in the United Kingdom. That sentence is the strongest support in the published treaty record for excluding the UK tax-free element from US income.

But the same Technical Explanation closes the other door. It states that paragraphs 2 and 4 of Article 17 are also subject to the saving clause, and that accordingly a US citizen resident in the United Kingdom will be subject to US tax on a lump-sum distribution from a pension scheme. Article 17(2) does not appear in the Article 1(5)(a) exception list, and the Technical Explanation says so in plain words. If a drawdown payment is a lump-sum payment within Article 17(2), the treaty gives a US citizen nothing.

So the entire question reduces to characterisation, and here we say plainly what the sources do and do not support. There is no revenue ruling, revenue procedure, regulation or other published IRS guidance that tells you whether a flexi-access drawdown income payment, a pension commencement lump sum, or a UFPLS is a paragraph 1 pension or a paragraph 2 lump-sum payment. There cannot be a contemporaneous treaty answer either: the Convention was signed on 24 July 2001 and the Protocol on 19 July 2002, while the UK pension flexibilities that created flexi-access drawdown and UFPLS took effect on 6 April 2015. Neither the treaty text nor the Technical Explanation could have contemplated the products your client is actually using. Anyone who tells you the position is settled is telling you something the published record does not support.

Periodic payment or lump-sum payment? The characterisation that drives everything

Because there is no citable answer, a preparer works the tests and documents the reasoning. These are the factors that carry weight on the face of the treaty and its Technical Explanation:

Regularity and pre-arrangement. A payment made under a standing instruction at stated intervals from a crystallised drawdown fund looks like a pension. A single discretionary encashment does not.
Whether the payment comes out of a crystallised flexi-access drawdown fund as drawdown pension income, or is a discrete UFPLS taken directly from uncrystallised funds.
How the scheme administers it under PAYE: a recurring pension payroll producing a P60, as against a one-off payment advice.
The wording of UK statute itself. An uncrystallised funds pension lump sum is legislatively a lump sum. That is not conclusive for treaty purposes, but it is an unhelpful starting point for anyone arguing paragraph 1.
The stated purpose of Article 17(2). The Technical Explanation explains that paragraph 2 was inserted to stop a person obtaining double non-taxation by taking a one-off distribution while resident in the other state. A steady retirement income stream is not the abuse the paragraph was written to catch.
Article 3(2), which provides that an undefined term takes the meaning it has under the law of the applying State unless the context otherwise requires. The Convention does not define lump-sum payment, so a US application of the term looks to US tax meaning, not to the UK product name.

Where a position is taken that reduces US income by reference to the treaty, disclose it. Form 8833 is the treaty-based return position disclosure required by Internal Revenue Code section 6114. The disclosure is not an admission of weakness; it is what converts an aggressive-looking number into a documented, defensible filing position, and it is the correct place to set out the characterisation analysis above.

How do you claim foreign tax credits on Form 1116 for UK tax on drawdown?

Article 24(1)(a) of the Convention obliges the United States to allow a citizen or resident a credit for income tax paid or accrued to the United Kingdom, in accordance with and subject to the limitations of US law. Article 24 is in the Article 1(5)(a) exception list, so the saving clause does not disturb it. In practice that means Form 1116, computed under the ordinary domestic rules.

Category. UK drawdown income is normally reported in the general category. The Form 1116 instructions define general category income as the residual: income that is not section 951A category, foreign branch category, passive category, or income in the section 901(j), treaty re-sourced or lump-sum distribution categories. A preparer should still satisfy themselves that the payment is not passive category before defaulting, and should note that the separate lump-sum distributions category on Form 1116 is tied to the Form 4972 election, which is not available for a foreign scheme.

Sourcing. For a US citizen resident in the UK drawing on a UK scheme, the income is already foreign source under domestic rules, so treaty re-sourcing under Article 24(2) is usually unnecessary. Do not create a re-sourced category where none is needed.

Paid or accrued. A cash-basis taxpayer claims the credit in the year the foreign tax is paid. Publication 514 confirms that a cash-basis taxpayer may instead elect the accrual basis by checking the Accrued box in Part II of Form 1116 on a timely filed original return, and that the election is irrevocable and binds all later years. On a UK drawdown file the accrual election is attractive in theory, because it lines the credit up with the UK liability rather than with PAYE deductions, but it is a permanent commitment across the whole return, so it is not a decision to take because of one pension.

Currency. The IRS states that it has no official exchange rate and generally accepts any posted rate used consistently, and that in general you use the spot rate prevailing when you receive, pay or accrue the item. On a drawdown file that means a per-payment spot rate is defensible and a single annual average is defensible, but mixing them inside one return is not.

Limitation and carryovers. The credit cannot exceed US tax multiplied by the ratio of foreign source taxable income to total taxable income. Where UK rates exceed the US rate on the same income, the excess is not lost: it can be carried back one year and forward ten.

How do you align the UK 6 April tax year with the US calendar year?

The UK tax year runs 6 April to 5 April. The US return is a calendar year. A UK P60 for 2026-27 therefore covers roughly nine months of US 2026 and three months of US 2027, and a single UK document can never be dropped straight onto a Form 1040. This is the most common source of quiet, repeated error on drawdown files, because the number on the P60 looks authoritative.

The method that works is to abandon the UK year as the unit of account and rebuild from payments:

Obtain every payment advice or payslip for the calendar year, not the P60 alone. Each should show payment date, gross, tax-free element where applicable, taxable element and tax deducted.
Build a schedule keyed on payment date: date, gross GBP, taxable GBP, UK tax deducted GBP, spot rate, and the USD equivalents.
Reconcile the schedule to the two overlapping P60s. Payments from January to 5 April of the calendar year should tie to the earlier UK year's P60; payments from 6 April to December should tie to the later one.
Carry the calendar-year totals to Form 1040 and to Form 1116, and keep the schedule. It is the working paper that answers an IRS question three years later, and it is what you will amend if HMRC later changes the UK figures.
Flag any payment made between 1 January and 5 April, because UK tax on those payments will not be finally settled until after the following 5 April, which is after the normal US filing date.

That last point is not a detail. It is the reason drawdown files belong on extension rather than on a 15 April filing.

Emergency month 1 PAYE on a first drawdown payment, and the US knock-on

A first flexible payment is routinely over-taxed in the UK, and almost no US-facing guide says so. HMRC's PAYE manual at PAYE94055 confirms that where the scheme administrator does not hold a tax code, tax is deducted from a flexibly accessed pension payment using the emergency code on a week 1 / month 1 basis. On that basis the payment is taxed as though it were the first of twelve identical monthly payments, so only one twelfth of the personal allowance and one twelfth of each rate band are treated as available. A single large first withdrawal is therefore pushed through the higher bands on a fiction, and the deduction can be far more than the member's actual UK liability for the year.

HMRC provides three in-year reclaim routes and, failing those, a post-year-end sweep. PAYE94055 sets out that P55 is used where the pot has not been emptied, P53Z where it has been emptied and there is other income, and P50Z where it has been emptied and there is no other PAYE income beyond the State Pension. The P55 guidance adds the conditions: you have flexibly accessed but not emptied the pot, you will not be taking regular or flexible payments before the end of the tax year, and the pension body is unable to make a refund itself. And PAYE94055 confirms that if no in-year claim is made, HMRC will automatically review the position after the end of the tax year and issue a calculation showing any over or underpayment.

Here is the US problem nobody writes about. If the US return for the calendar year of the payment claims a foreign tax credit for the full emergency-code deduction, and HMRC subsequently repays part of it, the credit was overstated. A refund of foreign tax already credited is a foreign tax redetermination. Publication 514 requires you to notify the IRS, to file Form 1040-X with a revised Form 1116 where the redetermination changes your US tax liability, and to file Schedule C (Form 1116) with the current-year return summarising redeterminations relating to prior years. The Schedule C instructions confirm that the schedule is how you satisfy the notification obligation and that a penalty can apply for failing to notify without reasonable cause. The Form 1116 instructions add that increases in US tax arising from a foreign tax redetermination are excepted from the ordinary statute of limitations under sections 6501(c)(5) and 905(c), so this is not a problem that ages out.

How a competent preparer handles the cycle across two years:

Before filing, ask directly whether a P55, P53Z or P50Z claim has been made or will be made, and whether HMRC has issued a post-year-end calculation. Do not infer it from the P60.
Where the answer is not yet known, extend the US return and file once the UK position is settled. This is the cleanest fix and it avoids the redetermination entirely, because the Form 1116 then claims only the net UK tax.
Where the return has already been filed and a refund then arrives, quantify the repaid amount in GBP, translate it at a rate consistent with the rate used for the original claim, and reduce the creditable tax for the year the tax related to.
File Form 1040-X with a corrected Form 1116 for that year if the change alters US tax liability. If it does not, because the credit was limited and the reduction merely shrinks a carryover, the notification obligation still applies.
Attach Schedule C (Form 1116) to the current-year return to notify the IRS of the redetermination and identify the year it relates to.
Expect a second bite. HMRC's automatic post-year-end reconciliation can adjust the figure again after 5 April, which can produce a further redetermination. Do not close the file after the first correction.

A worked example: a first UFPLS in November and a UK refund the following March

A dual US/UK national resident in London, aged 60, takes her first ever flexible payment from a UK personal pension on 12 November 2026: a single UFPLS of GBP 40,000. The scheme holds no tax code for her. GBP 10,000 is paid as the tax-free element and GBP 30,000 is taxed as pension income under the emergency code on a month 1 basis. Assume for illustration that the scheme deducts GBP 11,000 and that, after a P55 claim submitted in January 2027, HMRC repays GBP 4,200 in March 2027. The GBP figures are illustrative; the pattern is the point.

US 2026 return: the full GBP 40,000 is gross income, translated at the spot rate on 12 November 2026, unless a documented treaty position removes the GBP 10,000 tax-free element. Because the payment is a statutory lump sum taken from uncrystallised funds, that position is the weaker of the two fact patterns and, if taken, belongs on Form 8833.
Form 1116, general category: UK tax of GBP 11,000 if filed on a cash basis before the refund, or GBP 6,800 if the return is extended and filed after the March 2027 repayment is known.
If the 2026 return was filed early claiming GBP 11,000, the March 2027 repayment is a foreign tax redetermination: amend 2026 on Form 1040-X with a revised Form 1116 reducing the creditable tax, and attach Schedule C (Form 1116) to the 2027 return to notify the IRS.
US 2027 return: any further drawdown payments in calendar 2027, plus any additional adjustment arising from HMRC's automatic reconciliation after 5 April 2027.
UK side: the November 2026 UFPLS is a money purchase annual allowance trigger event, so the GBP 10,000 money purchase annual allowance applies for UK 2026-27 and every later year.
Asset reporting: the pension is reportable on the 2026 FBAR and, if the client is over threshold, in Part VI of the 2026 Form 8938.

The simplest version of this file has one payment and still touches two US tax years, two UK tax years, three US forms and one UK reclaim. That is the real shape of the work.

Reporting the UK pension itself: FBAR and Form 8938

Drawdown does not change the asset reporting, but it does change the numbers. The FBAR is required where the aggregate value of foreign financial accounts exceeded $10,000 at any time during the calendar year. The IRS confirms it is due 15 April with an automatic extension to 15 October, and that whether the account produced taxable income has no effect on whether it is a foreign financial account. A UK personal pension held with a UK provider is normally reported. The FinCEN instructions do contain a retirement plan exception, but it is written by reference to participants in plans described in specified United States Internal Revenue Code sections, and a UK personal pension is not one of them, so the exception does not on its face apply.

Form 8938 reporting runs on much higher thresholds. For taxpayers meeting the presence abroad test the thresholds are more than $200,000 at year end or $300,000 at any time during the year if unmarried or married filing separately, and $400,000 or $600,000 for married filing jointly. The Form 8938 instructions are specific about method: report your interest in the foreign pension plan in Part VI and do not separately report the assets held by the plan. They also give a valuation fallback: if you do not know or have reason to know the fair market value from readily accessible information, the maximum value is the fair market value, determined as of the last day of the tax year, of the cash and other property distributed to you during the year. For a client in drawdown, the pot value is almost always available from the provider, so the fallback should rarely be needed and should not be used as a shortcut.

The Money Purchase Annual Allowance: the UK consequence of flexible access

This is a UK rule with US file consequences, because it is triggered by the same event you are reporting. HMRC's Pensions Tax Manual at PTM056520 confirms that a trigger event occurs immediately before the first payment is made from a member's flexi-access drawdown fund, and when an uncrystallised funds pension lump sum is first paid to the individual. Once triggered, the money purchase annual allowance test applies for the tax year of the event and every subsequent tax year. GOV.UK gives the money purchase annual allowance as GBP 10,000, against a standard annual allowance of GBP 60,000.

Taking drawdown income from a flexi-access drawdown fund triggers it.
Taking a UFPLS triggers it.
The restriction is permanent from the trigger year onwards; it does not reset.
The provider must issue a flexible access statement within 31 days of first flexible access, which dates the trigger and is worth obtaining for the file.

For the US preparer the practical significance is twofold. The trigger date is corroborating evidence of when crystallisation and first payment happened, which is exactly the fact you need for calendar-year allocation. And where the client is still working and contributing, the restriction changes the contribution figures you will be reconciling in later years.

What documentation a preparer needs for a UK drawdown year

Ask for all of this at the start, not after the first draft. A drawdown file assembled from a single P60 will be wrong.

Every payment advice or payslip for the calendar year, showing payment date, gross, tax-free element, taxable element and UK tax deducted.
Both UK P60s overlapping the US calendar year, from the pension payroll.
The flexible access statement issued on first flexible access, with its date.
Confirmation of whether each payment was drawdown income from a crystallised fund or a UFPLS, in writing from the provider where the paperwork is ambiguous.
Any PAYE coding notice issued for the pension, and the code actually operated on each payment.
Copies of any P55, P53Z or P50Z claim submitted, with the date and the amount repaid.
Any HMRC post-year-end tax calculation for the relevant UK years.
The UK self assessment return for the overlapping UK years, where the client files one.
Provider statements showing the pot value at 31 December, for FBAR and Form 8938.
The exchange rate source used, so the same source is applied consistently across the return and in any later amendment.

Where the position is not settled, and how we document it

Being candid about uncertainty is a compliance strength, not a weakness. On UK drawdown the settled points are that the payment is includible gross income, that the timing follows the US calendar year, that UK tax suffered is creditable under Article 24 through Form 1116, and that the pension is separately reportable. The unsettled point is narrow and specific: whether the UK tax-free element within a drawdown payment or a UFPLS falls inside Article 17(1)(b), which survives the saving clause, or inside Article 17(2), which does not.

Our approach on that point is to characterise the payment on the actual facts rather than on the label the client's provider happened to use, to document the analysis in the file, to disclose any treaty-based exclusion on Form 8833 under section 6114, and to keep the schedule of payments and rates that would support the position on examination. Where the facts are weak, we say so to the client before the return is filed rather than after, and we price the risk of the alternative treatment openly. That is what comprehensive US tax return preparation for expats with UK pension income in drawdown actually looks like.